Finance: The Price Is Right

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Just as homeowners are rushing to refinance mortgages to cash in on falling interest rates, giant U.S. companies are feverishly rolling over the huge debts they assumed in the 1980s. In the heaviest weekly deluge of new issues ever, companies sold some $11 billion of corporate notes and bonds last week. High rollers included the federally owned Tennessee Valley Authority, which issued $2 billion of five-to-10-year notes, and AT&T, which sold $1 billion of debt securities with maturities of up to 30 years.

The flood of new issues followed the torrid pace set in 1991, when companies sold a record $132 billion of corporate bonds as the Federal Reserve Board pushed down interest rates. While most such deals represented refinancings that will reduce corporate payments to investors, the latest sales could also be a harbinger of corporate investment in new plant and equipment later this year. "If interest rates remain relatively low, we should see a rebound in capital spending once the economic outlook brightens," says John Lonski, senior economist for Moody's Investors Service.