Path: bloom-picayune.mit.edu!enterpoop.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.ibd From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Credit Market Date: Tue, 24 Nov 92 12:40:58 EST Message-ID: <5.1992Nov24.124058@AmeriCast.com> Lines: 86 11/24/92 TITLE Credit Market Prices Ease Under New Supplies; T-Bill Rates Hit A 5-Month High Phil Hawkins NEW YORK - The market retreated slightly yesterday under an onslaught of about $38.6 billion in new Treasury bills and notes. Seasoned bills fared the worst, partly because of a weekly auc- tion of $23.6 billion in equal amounts of new three-month and six-month bills. They also reflected continuing disappointment over the lack of a further reduction in nearby short-term in- terest rates by the Federal Reserve. Older bill prices were cut so as to boost the discount rates by about 0.03 or 0.04 percentage point. In addition, the interest returns on the two new bills were the most generous since the auction on June 29, or about five months ago. New three-month bills were awarded yesterday at an average discount rate of 3.27%, up from 3.13% last week and the highest since 3.59% in late June. The 3.27% rate, which resulted from an average price of 99.183, would be equivalent to a bond yield over three months of 3.34%. The average discount rate on new six-month bills was 3.45%, likewise well above the 3.37% a week earlier and the most since 3.66% on June 29. The 3.45% rate was set by an average price of 98.265 and would be the same as a bond yield over six months of 3.56%. Purchase orders at the latest auction totaled $35.11 billion for the three-month bills and $33.55 billion for the six-month bills. These included about $1.42 billion and $814 million, respective- ly, from individuals and other small investors. Another federal agency plans a three-part sale of about $2.71 billion in new short-term obligations tomorrow. The Federal Farm Credit Banks Funding Corp. will offer about $1.44 billion of three-month bonds, $900 million of six-month bonds and 374 million of one- year bonds. Other money market rates also moved higher yester- day. The benchmark federal funds overnight interbank lending rate climbed to around 31/8% from an average of 2.90% on Friday. The Federal Reserve, which currently is targeting this rate at about 3%, directly provided additional funds for four days. Longer- maturity debt issues also sustained losses. For example, the key 75/8% Treasury bond of 2022 declined by about 1/4 point, or $2.50 for each $1,000 face amount, to a price of around 1007/8, where the yield was approximately 7.55%. It remained, however, well above its original price of 99.59, to yield 7.66% in the $10.3 billion sale earlier this month. The Treasury yesterday sold $15 billion of new two-year 45/8% notes at an average yield of 4.72%, up sharply from 4.37% at the previous comparable monthly sale on Oct. 27. A minimum purchase of $5,000 was required. About $44.6 billion in purchase orders were submitted for the new notes, equal to slightly less than three times the amount actually available, including $652 million from small investors. At the October sale, almost $50 billion of orders were turnd in and odd-lot customers bought $870 million. Despite the rather modest initial demand, the new 45/8% notes soon rose on the resale mark- et to a premium price whereby their yield was trimmed to about 7.70%. About $10.75 billion of new five-year notes will be offered today in minimum denominations of $1,000 by the Treasury. They were yielding about 6.11% in advance trading late yesterday, according to the GovPX Inc. quotation service. Only one new corporate sale was launched in the latest session due to the heavy competing Treasury volume as well as the pending holiday lull. The market will close on Thursday, Thanksgiving, and also is expected to be open only until about 1 p.m. EDT both tomorrow and Friday. Western Massachusetts Electric Co. offered $85 million of 10-year 73/4% first mortgage bonds yielding 7.762%. Its bonds, rated Baa-1 by Moody's and BBB+ by Standard & Poor's, were distributed by a Morgan Stanley & Co. underwriting group. Nor St Pwr 57/8 1997 Aa-2 981/8 983/8 -1/8 6.19 Dig Equip 71/8 2002 A-2 955/8 957/8 -1/8 7.77 Du Pont 63/4 2002 Aa-2 96 961/4 Unch 7.28 News Amer 91/8 1999 Ba-2 997/8 1003/8 -1/8 9.06 Fruit Loom 77/8 1999 B-1 995/8 1001/8 -1/8 7.85 Multicare 13 2002 B-3 975/8 981/8 -1/8 12.75 Penn Traff 103/8 2004 Ba-3 1001/2 101 Unch 10.21 Fr-McMor 6.55 2001 Ba-3 86 88 Unch Conv Home Dep 41/2 1997 A-2 132 133 Unch Conv Mead 63/4 2012 Baa-1 100 102 Unch Conv Br-Ferr 61/4 2012 A-3 95 96 Unch Conv IBM 77/8 2004 Aa-1 1001/2 102 Unch Conv Conv-Convertible. This article is copyright 1992 Investors Busi- ness Daily. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM