Analysts have been telling clients to invest in regional banks' debt
In the last week spreads on multinationals-the difference between their
Bank bond analysts, however, remain skeptical.
"It is almost like deja vu," said bank bond analyst Van Hesser of
"A lot of the same positive sentiment about money-centers was in place
But he said there are too many potholes in the global economy that
Bank bond analyst Thomas Flynn of Morgan Stanley & Co., also remains
Mr. Flynn said he tells clients to put more of their money in regionals.
"Right now we are focusing on what is happening with Brazil. If that
Bank bond analyst David Hendler at Credit Suisse First Boston argued
However, he acknowledged that he "recommends regional bank bonds a
Still, investors are snapping up money-center debt as much as regional
"Money-center debt is getting some benefit from the January effect,"
"People have money to put to work and they are just buying bank paper
That may change, however, as more bank bond analysts beat the drum for
Last week Goldman Sachs kicked off a road show, trumpeting the virtues
The spreads on regional bank paper have tightened as much as 10 basis
"We haven't been at those levels for a long time."
Regional banks make much better credits than multinational banks, Mr.
The average return on assets for the super regionals is 1.5%, whereas
Mr. Hesser said, "Profitability for money-centers has not improved,