Bond spreads for securities firms barely budged in the wake of the merger announcement by Banker's Trust New York Corp. and Alex. Brown & Sons Inc.

Bank bond analysts and traders said that while equity investors have piled into the stock of both companies, bond investors have been much more reluctant, fearing the impact of possible interest rate hikes.

"When rates are raised, these companies (securities firms) tend to underperform," said bank bond analyst Katharine Rossow of Chase Securities Inc., noting that higher interest rates are more unfriendly to securities firms than banks. "And even though people expect consolidation, they have been expecting it for some time."

Ms. Rossow added that while yields on Banker's Trust bonds have risen about two basis points, those on the bonds of Lehman Brothers, Salomon Brothers Inc., and Donaldson, Lufkin & Jenrette-securities firms that are possible takeout targets-have remained un-changed.

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