WASHINGTON, May 19 (Reuters) - Moody's downgrade of the

U.S. sovereign credit rating late Friday appeared to have a

modest impact on corporate bond market activity on Monday, as

spreads widened slightly and new bond sales started the week

softer than expected.

Late Friday, ratings agency Moody's announced a one-notch

downgrade to the U.S. government's credit rating, at the same

time changing its rating outlook from stable to negative.

"This one-notch downgrade on our 21-notch rating scale

reflects the increase over more than a decade in government debt

and interest payment ratios to levels that are significantly

higher than similarly rated sovereigns," Moody's wrote late

Friday.

The downgrade from Moody's follows similar moves from Fitch

in 2023 and Standard & Poor's in 2011.

Investment grade bond spreads widened modestly on Monday

after the Friday ratings downgrade, according to Dan Krieter,

head of fixed income strategy at BMO Capital Markets.

The ICE BofA Corporate Index was roughly one basis point

wider on the day while the High Yield Index was around five bps

wider, Krieter noted.

IG bond spreads had previously tightened two basis points to

93 bps to close Friday trading, according to the ICE BofA

Corporate Bond Index. This is their tightest since

March 27 before Trump's 'Liberation Day' tariffs.

Junk bond spreads had tightened a modest 4 bps to 316bp late

Friday, according to the ICE BofA High Yield Bond Index

.

At least six companies, including French bank Crédit

Agricole and food services company Sodexo,

announced bond offerings on Monday but there were some who

decided to hold back any issuance, said one senior syndicate

source.

Monday issuance volume is likely to be less than $10 billion

which was a slow start for a week that is expected to see $30

billion of new bond supply, according to Krieter.

"So a bit lighter with some borrowers potentially wanting to

see how the market reacted to the news," he said.

"Given the muted response, I would expect (issuance)

tomorrow to be large."