Eurodollar Bonds Show Little Reaction To Two U.S. Reports --- Special to The Wall Street Journal
LONDON -- Eurodollar bond prices showed only limited reaction to news that U.S. March housing starts jumped 16.2% while March industrial production rose 0.3%.</br></br>"People are still focusing on the (expected) revision" due tomorrow of the U.S. gross national product from the "flash" estimate of 2.1% first-quarter growth, on an annual basis, one syndicate manager said. "Anything else will be secondary."</br></br>Italy's state railway, Ferrovie Dello Stato, came into the Eurobond market with $420 million of 12-year floating-rate notes and found a fair number of investors interested in the issue, syndication managers said. Lehman Brothers International Inc. is lead underwriter.</br></br>Another floating-rate note, a $100 million issue for Saitama International (Hong Kong) Ltd., received a much cooler reception, largely because this and other mismatched notes no longer offer investors enough extra yield to compensate for their slim interest rates, in this case 1/16 point below the six-month London interbank bid rate, or Libor. Merrill Lynch Capital Markets is the lead underwriter. Mismatched notes pay interest based on a six-month rate, but fix the rate monthly, allowing investors to fund their purchases at usually cheaper one-month rates.</br></br>Also, a variety of technical factors left West German government bond prices slightly lower but Euromark issues gained about 1/4 and participants continued to express optimism about the German currency.