Following in the footsteps of Walt Disney and Coca-Cola, ABN Amro is taking the long-term view in issuing corporate debt.
ABN Amro, a Dutch bank, is marketing a 100-year issue of subordinated debt, according to capital market sources. Coca-Cola and Disney issued 100-year bonds this year, the first time bonds of this extended maturity have been sold since 1954, according to Moody's Investors Service.
An ABN Amro official confirmed that the bank plans to issue $100 million to $150 million of debt, but declined to comment further.
Not a Big Premium
The ABN Amro issue is being marketed to yield 100 to 110 basis points over the 30-year Treasury bond and is noncallable for life. Morgan Stanley & Co. is lead manager, with CS First Boston and Merrill Lynch & Co. co-managing the offering.
That isn't a big premium to pay, compared with ABN Amro's other bonds. The spread on ANB Amro's 30-year bond, for example, is around 75 to 80 basis points above Treasuries. The 100-year bond will probably be only 20 to 30 basis points above that.
The 100-year issue would mark the second time this year that the Amsterdam-based bank has been lured by low interest rates into raising long-term debt. In May, the bank raised $250 million of 30-year subordinated debt in the United States at a spread of 80 basis points over the Treasury bond.
The bank's subordinated debt is rated Aa2 by Moody's Investor Service and A plus by Standard & Poor's Corp.
After trading around 6% for more than a week, the yield on the 30-year bond fell substantially last Friday. The 6.25% 30-year Treasury bond was being quoted to yield 5.91% Tuesday afternoon.
Expectations of low inflation and Friday's report on September employment, which showed tepid growth, triggered the recent drop in long-term rates.
Norwest Corp. is also eyeing a long-term debt issue. The Minneapolis-based superregional bank would like to raise $200 million of 30-year subordinated debt, said market sources.
Separately, CoreStates Capital Corp., a unit of CoreStates Financial Corp., on Tuesday issued $200 million of subordinated notes.
The 10-year notes were priced to yield 5.90% percent, or 67 basis points above comparable U.S. Treasuries.A Busy MarketRecent debt salesCoreStates $200 million 10-year subordinated debtCapital Corp.Uncoming issuesABN Amro $100-150 million 100-year subordinated debtNorwest Corp. $200 million 30-year subordinated debt