Signs of economic strength bolstered corporate bond prices yesterday, while the new-issue sector was sparse.
The national purchasing managers' index was reported at 45.4% in May, up from 42.1% in April. New construction spending in April increased 0.8%, to a seasonally adjusted annual rate of $392.6 billion, the largest monthly gain in over a year.
The news sent high-yield prices up about 1/4 point on average, as the Dow Jones industrial average rose 7.83 points, to 3035.33.
Activity was brisk during the morning session but quieted down in the afternoon. Cyclical names were the main focus.
Investment-grade bonds posted gains of 3/8 of a point, traders said.
In new issues, Ford Capital priced $300 million non-callable notes as 9s to yield 9.046% in 1996, 125 basis points over comparable Treasury prices.
J.P. Morgan was the sole underwriter. Moody's Investors Service rates the issue A2, while Standard & Poor's Corp. rates the notes A.
Owens-Corning Funding, a unit of Owens-Corning Fiberglass Corp., issued $150 million of 10 5/8 10-year guaranteed debentures, priced to yield 10.039% in 2001, or 189 basis points above comparable Treasury issues.
The non-callable notes are rated Baa-2 by Moody's Investors Service and BBB-minus by Standard & Poor's Corp. Goldman Sachs & Co. was sole underwriter for the deal.
In new-issue activity in the asset-backed arena, Unisys Finance Corp. sold $131 million of lease receivable-backed certificates.
The certificates, rated triple-A by Standard & Poor's Corp., were sold in a private placement transaction. Proceeds from the sale will primarily be used by UFC as part of its asset sale program to reduce debt.
The program has realized more than $300 million since it was started in early 1990 to help reduce debt. The company said it was encouraged by recent program progress and will continue to aggressively pursue its 1991 debt reduction goal of at least $600 million.
Debt reduction will be driven by cash from operations and the sale of non-strategic and idle assets including real estate and selected business units. The program may also include the sale of additional lease receivable-backed certificates.