School is back in session for the high-grade market this week, with the World Bank as well as the republics of Italy and Portugal seen issuing a total of $3.25 billion of fresh debt.

New Jersey Bell Telephone Co. is also expected to participate, offering a $300 million competitive deal.

John Lonski, a senior economist at Moody's investors Service, said this week will "most definitely" be a busy one, citing the long bond yield's fall to 5.93% on Friday.

Lonski said, however, that attractive rates will not be around forever. If he were an issuer, he would issue this week, the economist said.

"I would try to exploit this opportunity [to borrow] at borrowing costs that may not be around for long." Lonski said.

While the long bond's yield was pushed lower, and its price higher, by an August employment report that shows 39,000 fewer nonfarm payroll jobs, other aspects of the report indicate that the economic outlook is not as gloomy as some investors may think.

Lonski cited the lengthening of the average work week by twotenths of an hour and a sharper-than-expected rise in hourly earnings at 0.5%.

The economist saw Friday's report as "another indication of a mediocre economic upturn."

With that economic picture, "There is a good chance that the market is increasingly vulnerable to a corrective sell-off," Lonski said.

As announced earlier. the World Bank is expected to launch a $1.25 billion U.S. dollar global bond offering Wednesday or Thursday. Lehman Brothers and Nomura Securities will serve as joint bookrunning lead managers.

The bank has not decided upon a maturity, but it is likely to be 10 years, according to Hakan Lonaeus, acting senior manager for dollar and yen funding at the bank. Lonaeus declined to discuss price talk for the offering.

The Republic of Italy is expected to bring a $1 billion offering of U.S. dollar global bonds sometime next week through co-lead managers Salomon Brothers Inc. and Goldman, Sachs & Co.

Details were more sketchy on the Republic of Portugal offering, expected to total $1 billion. Merrill Lynch & Co. was said to be involved in that issue.

Though New Jersey Bell spokesman James W. Carrigan declined to say whether the company planned a 9300 million competitive deal, he said that the company is always looking at ways to take advantage of favorable interest rates.

Over all in investment-grade new issues, August was sleepier than July, and both were down sharply from June levels, according to Securities Data Co. August posted 147 deals totaling $22.4 billion, while July had 222 issues totaling $29.9 billion, and June had 285 issues totaling 46.7 billion.

As for this week's high-yield issues, activity is expected to be lackluster, despite a $9.3 billion forward calendar, said Kingman D. Penniman, an executive vice president at Duff & Phelps/MCM Investment Research Co.

"It's going to be quiet." Penniman said, adding that so far, the only offering likely for this week will be the A:125 million Rohr Inc. senior subordinated note deal delayed from last week.

"It's more of a rest." Penniman said of the expected lull. He described August as "hot and busy."

"The sell side is exhausted [and] the buy side is having a hard time just trying to keep up with the due diligence on the new issues." Penniman said.

Penniman noted, however, that "the pipeline is showing no signs of abating." Many of the upcoming deals differ from earlier offerings in that they are largely for new money, not refinancing, and coupons are going higher. he said.

"The premium now seems to be going back to the buyer." Penniman said.

In secondary trading Friday, high-grade bonds ended a basis point or two wider as the largely deserted market failed to keep pace with what one trader called a "heck of a run-up in Treasuries."

High-yield bonds ended unchanged to slightly higher in a lethargic session.

New Issues

Commercial Credit Co. reportedly issued $200 million of 5.90% notes due 2003 at par. The noncallable notes were priced to yield 57 basis points more than comparable Treasuries. Moody's investors Service rates the offering A2, while Standard & Poor's Corp. rates it A. Smith Barney Shearson acted as lead manager of the offering.

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