B: An obligor rated 'B' is more vulnerable than the obligors rated 'BB', but the obligor currently has the capacity to meet its financial commitments.

Bonds rated BB and lower are considered speculative grade rather than investment grade.

Still, short-term corporate debt securities - especially those rated B and BB, at the high end of the junk category - are attractive relative to Treasuries, she said.

They paid $1,052.50 for the bonds, which are rated BB and now trade at $1,050.

The managers bought 7 1/2 percent bonds due in April 2012 and rated BB.

As of June 30, many of Presidential's bonds were higher-quality junk - companies rated "BB" by Standard & Poor's, like Chiquita Brands.

The issue, which Standard & Poor's has rated BB, had been expected to be offered to investors in February.

S.&P. said this could have "negative implications" for credit ratings on $95 million in Pennwalt senior debt, now rated BBB-minus, and preferred stock rated BB.

Chrysler's debt is rated BB with positive implications by the Standard & Poor's Corporation and Ba-2 by Moody's Investors Service.

Both are rated BB.