CHRYSLER <C> SELLS BONDS FROM ITS PORTFOLIO
Chrysler Corp today sold 405 mln dlrs
of corporate bonds from its nearly 3.5 billion dlr pension fund
to Wall Street investment bankers, vice president and treasurer
Fred Zuckerman said.
    He said this was the first of two planned sales of
corporate issues from the fund's portfolio. Zuckerman said
Chrysler will sell slightly less than one billion dlrs of
corporates.
    "Phase two (the second sale) will be in a month or so," the
Chrysler executive said, adding that proceeds will be invested
exclusively in the equities market.
    Before today's sale of corporate bonds, those securities
had comprised roughly two thirds of the pension fund portfolio.
    "After the two sales, equities will amount to 50 pct or
more of the portfolio," Zuckerman said.
    "We believe that the equity market has much more upside
potential than the bond market," the executive said. "Interest
rates are not coming down and I would not bet a lot that they
will drop sharply."
    He added, "I personally think interest rates may decline by
50 basis points at the most this year."
    Zuckerman said the 405 mln dlr bond sale was composed of
139 separate issues.
    "Sixty pct were utilities, 20 pct were issued by foreign
governments or corporations, and 20 pct were financial
institutions," he detailed.
    The Chrysler treasurer said that the corporate paper had
typically an 18-year maturity. "The securities were long-term,
high-quality bonds, mostly rated AA-minus or A-plus," he said.
    Zuckerman said Chrysler sold the corporate bonds at about
1.6 pct above yesterday's closing prices for these issues.
"That showed our portfolio is desirable," he commented.
    Corporate bond traders noted that Chrysler's sale occurred
against the backdrop of a slightly weak secondary market.
    They said they believed that Chrysler was sold the
corporates at a large profit because the issues were bought by
the automaker for its portfolio when interest rates were much
higher.
    Chrysler's Zuckerman said his company sold the corporate
issues to four large Wall Street securities firms.
    He said that Morgan Stanley and Co Inc and Salomon Brothers
Inc bought most of the bonds. However, Zuckerman declined to
name the other two houses.
    Yesterday, Chrysler presented four investment bankers with
a list of bonds and asked them to submit bids by this morning.
    Zuckerman said that Morgan Stanley bought more corporate
bonds than any one of the other three houses.
    Wall Street sources said they believed First Boston Corp
and Merrill Lynch Capital Markets were also in on the bidding
for the corporate bonds. They believed these two firms were
awarded bonds by the carmaker as well.
    A spokesman for Morgan declined to comment and referred
inquiries to Chrysler. Officials at Salomon, First Boston and
Merrill Lynch were unavailable for immediate comment.
 Reuter
