"The sentiment is still a bit soft," said a telecoms bond trader, adding that there was constant talk of telecoms operators such as Telecom Italia and Telefonica or France Telecom issuing a new bond.
Analysts have previously said they expect issuance from one or more telecoms names, but only after the full-year reporting season is over.
Results from Telecom Italia - due to report 2004 earnings on Thursday - and smaller operators were, however, unlikely to rock bond prices unless they provided big surprises, a trader said.
In the auto bond market, General Motors bond spreads tried to edge wider earlier in the day but ended Monday unchanged, a trader said.
"The sentiment is still very nervous. February auto sales numbers are due on the 1st of March and there are fears of production cuts for GM," said a trader.
"There are still people looking to lighten up (their GM bond assets) and there are not many people who are brave enough to buy," he added.
In the wider market, the FTSE Euro Corporate Bond Index showed investment-grade corporate bonds in euros yielding an average 40.5 basis points more than similarly dated government bonds at 1554 GMT, 0.7 basis point more on the day.
Ericsson reaped the benefit of three years of restructuring as Fitch Ratings raised its credit rating on the Swedish group to BBB- from BB+ and said the outlook remains positive.
"It's one of the only things moving in a very quiet market," said a trader in London. "It's a result of the upgrade."
Five-year credit default swaps on Ericsson were trading around two basis points tighter bid at 50 basis points, the trader said. That means it costs 50,000 euros to annually insure 10 million euros of Ericsson debt.
The Swedish telecoms equipment group suffered in 2001 and 2002 as demand for its products from debt-laden telecoms operators dwindled, leading its credit ratings to fall into the "junk" category in 2002, and the company had to launch an emergency rights issue of 30 billion Swedish crowns ($4.30 billion).
Standard & Poor's rates Ericsson at BB+, one notch below investment grade, and said in November the outlook for the rating was positive, suggesting it could be raised over the next 12 to 24 months. Moody's Investors Service rates the company at Ba2, one notch lower than S&P, also with a positive outlook.
Fitch said in a statement the upgrade to BBB- reflected Ericsson's solid financial profile at the end of 2004 and growing signs that demand conditions in mobile systems markets had stabilised.
In the high-yield market, German fashion house Escada is considering issuing a high-yield bond worth between 150 million and 200 million euros ($195.9 million to $261.2 million), market sources said.
The Bavarian firm, which makes expensive womenswear, is expected to announce details of the bond issue with an annual news conference on March 3, one source said.
A spokesman said Escada is always looking into ways to finance its business and refinance debt. "This could be a new bond," he said, declining to comment on market talk of a high-yield bond.
A financial source added that no decision had been made yet.
On Tuesday, German packaging company Gerresheimer Glas will begin marketing 150 million euro 10-year high-yield bond, a source said last week, and British home improvement chain Focus Group is roadshowing its 100 million pound ($189.8 million) mezzanine note.
Glass maker Ardagh Glass will sell a 125 million euro ($163.3 million) senior pay-in-kind note on Wednesday through a newly created holding company Caono Plc, a banker familiar with the deal said.