Falling rates bring flood of debt to markets

January 08, 1992|By Kenneth N. Gilpin | Kenneth N. Gilpin,New York Times News Service

NEW YORK -- A torrent of new corporate debt securities flooded the credit markets yesterday as companies began to react to the drop in interest rates since Dec. 20.

Analysts and investment bankers have been expecting a surge ever since the Federal Reserve Board cut its discount rate by a full percentage point, to 3 1/2 percent, and lowered its target on the overnight federal funds rate by half a point, to 4 percent.

Those rate cuts have prompted rates in the secondary market for Treasury securities, the benchmarks used for pricing corporate issues, to fall by more than one-quarter of a percentage point, or 25 basis points, over the last few weeks.

Analysts said that decline had forced corporate treasurers to amend their financing strategies for 1992.

Well over $2 billion worth of new corporate debt was priced yesterday, including 30-year bond offerings from AT&T and Du Pont.

It is the first time that Du Pont has sold 30-year securities since 1986. AT&T sold an offering of 40-year debentures late last year.

Despite the heavy supply of new corporate issues, prices of Treasury notes and bonds continued to rally.

Short-term Treasury bill rates fell for the second straight session.

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