In a first, Argentina's Banco de Galicia planning a $200 million Yankee bond.

Banco de Galicia y Buenos Aires SA plans to issue a $200 million Yankee bond. becoming the first private Latin American bank to raise debt in the U.S. domestic market.

The 10-year issue be lead managed by Goldman Sachs and Merrill Lynch, said Hector E. Arzeno, head of the Argentine bank's U.S. representative office in New York.

It will probably be priced sometime in November, Mr. Arzeno said.

Dollar Funding Needed

Approximately 50% of the bank's assets is in U.S. dollars, and Galicia needs dollar funding to manage its dollar-based lending.

The bank said in a statement that proceeds of the offer will be used to fund residential mortgages and consumer loans and to make loans to corporate clients.

The bank has already raised funds through several bond issued on the Euromarkets, including a $50 million, three-year bond privately placed recently, but has so far refrained from attempting to tap the U.S. market.

Last Friday, Moody's Investors Service assigned a rating of B1 to the $200 million senior debt obligation Galicia plans to issue as well as a B1/Not Prime rating to the bank for its long-term and short-term deposits.

Sovereign Ceiling

Moody's said the ratings were constrained by Argentina's sovereign ceiling of B1 for foreign currency obligations.

In a subsequent release, Standard & Poor's Corp. said it assigned a BB-minus rating to the bonds.

The agency added that the only thing preventing a higher rating was the BB-minus assigned to Argentina. S&P noted that Galicia' assets have grown 269% in the last four years and that the bank earned $57 million for the year ended June 30, or 2.3% of average assets and 19.2% of average equity.

Headquartered in Buenos Aires, Galicia had $2.7 billion of assets as of June 30, making it the fourth-largest commercial bank and second-largest private bank in Argentina.

It has been steadily raising its profile in the United States and is currently seeking regulatory approval to convert its U.S. representative office in New York City to a branch.

In June, the bank raised some $60 million by issuing three million American depositary receipts at a price of $21.75, becoming the first private Latin American commercial bank to issue registered, unlisted stock in this market.

Galicia plans-to-join a growing roster of foreign banks attracted by low interest rates and an opportunity for long-term dollar funding in the U.S. market.

Easy Market to Enter

Unlike foreign corporations, which have to supply the Securities and Exchange Commission with extensive information, foreign banks with U.S. branches do not, making it relatively easy for them to enter this market.

Banks issuing Yankee bonds often use the funding to match their dollar assets with dollar liabilities.

According to Securities Data Corp., 18 foreign commercial banks have issued $3.35 billion worth of straight nonconvertible debt in the United States this year, up from $2.9 billion for all of 1992 and $2.1 billion in 1991.

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