First National Bank of Boston, the banking unit of Bank of Boston Corp., issued $200 million of 10-year subordinated notes Wednesday through an underwriting group led by Merrill Lynch & Co.
The note offering marked only the second time this year that Bank of Boston has tapped the subordinated debt market. Early this year, the company issued $100 million of sub debt.
Like many banks, Bank of Boston satisfied most of its capital needs last year, raising more than half a billion dollars in subordinated debt.
Proceeds from Wednesday's note sale will be used mainly to fund the bank's increased lending business, said William Shea, treasurer.
Mr. Shea said Bank of Boston has no present plans to issue more debt this year, though he didn't rule it out. "It depends on how we see business going," he said. The 8% notes were priced last week at 99.074 to yield 8.138%, or 72 basis points over the 10-year Treasury note. Including fees, the all-in spread was 82 basis points over the 10-year Treasury note, Mr. Shea said.
The notes are rated BBB. by Standard & Poor's Corp., and Baal by Moody's InvestOrs Service.
Bank of Boston's note sale follows the issuance last week of $100 million of subordinated notes by Alabama's Regions Financial Corp. As reported, Regions issued 30-year notes with a put option exercisable in the 10th year.
Regions and its investment bankers said the deal marked the first time in memory that a bank holding company had issued a put bond.
But if Bank of Boston is any indication, put bonds aren't for every bank.
Mr. Shea said his bank prefers to stick to more conventional, straightforward financings.
Meanwhile, Bank of Boston's New England rival, Fleet Financial Group, filed a shelf registration with the Securities and Exchange Commission this week covering $500 million of debt and equity.
Fleet said proceeds would be-used in part to fund investments in its subsidiaries. No underwriters were listed.
