NTC Capital, a unit of Northern Trust Corp., came to market last week with $150 million in 30-year trust-preferred securities with a floating rate.
The issue, priced at 60.5 basis points above three-month London interbank offered rate, pays quarterly as opposed to fixed-income trust- preferred securities that pay semiannually.
Traders and investors said that the aggressively priced issue was oversubscribed and performance in the secondary market was "reasonable, with some securities still out there."
Goldman Sachs & Co. was lead underwriter on the transaction.
Moody rated the issue A-2, while Standard & Poor's rated it A.
Bankers Trust New York Corp., First Maryland, and CoreStates Financial Corp. placed similar private and public floating securities in the Euromarket two weeks ago.
The Northern Trust is the first floater to be issued in the United States.
And other such issues are on the way. Market sources said several "high- profile banks are coming to market."
The floating-trust preferreds enable banks to raise regulatory capital even more cheaply than the traditional trust-preferred security, said capital market experts.
Others note that floaters reduce the risk that comes with swapping long- term securities.
However, trader Bill Ingram at NationsBanc Capital Markets Inc. pointed out that such issues are limited. "The depth of the market for the 30-year floater is limited," said Mr. Ingram. "The Europeans are very name- sensitive, favoring higher-rated names."
Capital markets associate Scott Romanoff of Goldman Sachs argued that the floating rate capital securities are less sensitive to retail name recognition because they are distributed to the broadfixed-income institutional market.
