Three banks issued debt this week, although fears of deteriorating credit quality and rising interest rates still pervade the market.
First Union Corp, Charlotte, N.C., came to market with $300 million in 10-year subordinated notes on Tuesday. The issue, led by Goldman, Sachs & Co., was priced to yield 7.5434%, or 65 basis points above comparable Treasuries.
Also on Tuesday, Wachovia Bank of North Carolina issued $100 million of two-year Eurobonds through lead underwriter Merrill Lynch International. The issue was priced to yield 6.499%, or 8 basis points above comparable U.S. Treasury notes.
And on Monday, Capital One Financial Corp., Falls Church, Va., issued $200 million in three-year senior notes through lead underwriter Lehman Brothers Inc. The noncallable notes were priced at par to yield 7.20%, or about 70 basis points over Treasuries.
Wachovia's treasurer, Richard B. Roberts, said the company was not spooked by the spectre of rising interest rates. Wachovia is noted for "averaging in" the market, he said, issuing debt periodically rather than in one fell swoop.
"You don't hit the home runs, but you don't hit the bottom either," Mr. Roberts said.
The transaction differs from other Wachovia issues in that the notes are being marketed to retail rather than institutional investors.
Meanwhile, bank bond analyst Allerton G. Smith of Donaldson, Lufkin, & Jenrette said that Capital One's deal was "fairly valued."
"There are investors who are skittish about banks with consumer credit portfolios," said Mr. Smith. "But Capital One has the most rigorously tested credit card portfolio of any banking company."