Star National Bank, a subsidiary of Star Banc Corp., has issued $100 million of 10-year subordinated notes. The noncallable issue was priced to yield 6.726%, or 67 basis points over comparable Treasury securities.
Ratings analyst David Martin at Fitch Investors Service said that proceeds would be used to fund Star Banc Finance Inc., which has previously been financed by the parent company's commercial paper program.
"As the company's asset base has grown, they need to extend the maturity of the funding," Mr. Martin said.
The analyst said that Star Banc had issued debt infrequently in the past because its acquisition of deposits produced excess liquidity.
However, he noted, proceeds from the issue could help replenish the company's capital levels, which were reduced by branch and bank acquisitions in 1994 and 1995.
Star Banc recently agreed to buy seven branches from Ameritrust National Bank in Ohio.