Corporate bond prices were unchanged in dull trading yesterday ahead of today's employment report, while new issuance was relatively modest.

The debt markets were disappointed by yesterday's initial claims report, which reflected a slightly stronger economy.

Initial state unemployment claims fell 6,000 to a seasonally adjusted 439,000 in the week ended May 25.

Both high-yield and investment-grade prices were unchanged on the day as the markets await the release of the May employment report. Traders noted that there was relatively little activity as the economic picture remains uncertainn.

In rating news, Standard & Poor's Corp. said it lowered about $5.2 billion of Midland Bank PLC's debt.

The rating agency said the downgrades reflect the continuing difficult operating environment for banks in the United Kingdom, which has resulted in a significant increase in problem loans, and pressure on Midland's profitability capital.

Standard & Poor's lowered Midland Bank PLC's certificate of deposit rating to A/A-1 from A-plus/A-1.

Also lowered are the ratings on the firm's subordinated debt to A-minus from A, junior subordinated debt to BBB-plus from A-minus, and rule 415 shelf registered preference stock to preliminary BBB-plus from preliminary A-minus.

The subordinated debt ratings of Midland American Capital Corp. and Midland International Services B.V., guaranteed by Midland Bank PLC, are lowered to A-minus from A.

Altogether, about $5.2 billion in debt is affected.

In new-issue activity, PaineWebber Inc. priced $500 million of debentures for GTE Corp.

The offering was priced at 9.10s to yield 9.118% in 2003, 90 basis points above the comparable Treasuries.

The notes are noncallable and rated A-3 by Moody's Investors Service and A-minus by Standard & Poor's Corp.

Goldman, Sachs & Co., Merrill Lynch Capital Markets, and Salomon Brothers Inc. were co-managers on the deal.

Salomon priced $150 million of subordinated notes for Johnston Coca-Cola Bottling Group Inc. The notes were priced at 11.50% at part in 2001 and are rated B1 by Moody's Investors Service and BB-plus by Standard & Poor's Corp.

Bear, Stearns Cos. issued $150 million of 9 3/8% senior notes, priced to yield 9.421% in 2001, 121 basis points over the comparable Treasury issues. The notes are noncallable and rated A2 by Moody's and A-minus by Standard & Poor's.

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