Huntington Bancshares issued $250 million of medium-term Euronotes on Friday, taking advantage of increasing overseas demand for U.S. bank notes.

The Columbus, Ohio, regional bank offered the floating-rate notes in an issue led by Morgan Stanley's international division.

The issue was oversubscribed, and attracted investors at a price equal to the three-month London Interbank-offered rate, plus 10 basis points, market sources said.

Euronotes issues by U.S. regional banks are rare, but "there clearly is demand for floating-rate paper in Europe," said Beth Russell, senior vice president of the Treasury Department at Huntington Bancshares.

Ms. Russell said Huntington occasionally issues bank notes as other financial instruments reach their maturities. It is the inaugural issue of a $2 billion program of medium-term notes for which the $20 billion-asset bank filed three weeks ago.

Issuing in the international market "is a way to diversify our investor base and provide more liquidity," Ms. Russell said.

"It has been a while since a bank of (Huntington's) size has come to the Euro markets," said bank bond analyst Katharine Rossow of Chase Securities Inc. More often, it is the larger banks that are able to take advantage of name recognition to access the markets overseas, she said.

But demand for smaller banks is expected to increase as international investors become more familiar with regional banks' financial performances .

"The international markets have become so comfortable with the U.S. banking system that they are willing to look at some of the regionals," said bank bond analyst Michael Leit of Prudential Securities. "Their numbers justify it, and if you look at their performance, clearly they are doing well."

Rick Schwartz, a principal at Morgan Stanley, agreed. "We expect significantly more issuance in Europe as it is one of the most attractive markets for raising floating-rate funding. Several more new bank names in the European markets are expected in the coming months, Mr. Schwartz said.

Bank bond analyst Caroline Smith of ABN Amro Securities USA Inc. said she "would not be surprised" if more regional banks issue overseas. The banks need alternative sources of funding while foreign investors are becoming more willing to consider the debt of "A-type names," she said.

Other regional banks that have international bank note programs include Norwest Corp. and Comerica Inc.

Comerica issued a similar deal of $300 million in floating-rate Euro notes earlier in May.

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