Banks tapped the bond market for $800 million on Thursday and Friday, attracted by low rates or attractive swaps into floating-rate payments.

The most notable deal was Norwest Corp.'s $200 million subordinated issue with a rare 30-year maturity. First Union Corp., Republic New York Corp. and J.P. Morgan & Co. issued a total of $600 million of 15-year subordinated.

Norwest's 30-year issue was priced to yield 6.68%, 72 basis points over the 7 1/8% 30-year U.S. Treasury bond. Morgan Stanley & Co. was lead underwriter of the issue, which was rated A2 by Moody's Investors Service Inc. and A by Standard & Poor's Corp.

"This really is a rate play, and nothing beyond that," said Terry Fehrman, assistant treasurer at Norwest. "We've been watching the 30-year bond for several weeks. We had the view here that it's maybe at the lowest level it would ever get to, and we thought it would be wise to lock up some long-term liquidity," she said.

Goal of 6.75%

The Minneapolis-based bank set goal of a 6.75% interest rate, including underwriting costs, and jumped into the market when it could reach that target, she said.

The bank opted for a subordinated issue rather than a less expensive senior deal because the additional cost "was at most five basis points, and we thought it was a cheap way to get more capital," said Ms. Fehrman.

Norwest has not issued debt with more than a 10-year maturity during the last five years, said Ms. Fehrman, and it has not issued debt with comparable maturity since a 1978 offering of 25-year debt.

Republic Issue

Republic on Thursday issued $250 million of 15-year subordinated notes. The issue was priced to yield 5.92%, a yield spread of 70 basis points over the 10-year U.S. treasury note.

A capital markets source said the New York bank had entered a interest-rate swap to achieve funding at the London interbank offered rate. Calls to the bank were not returned by press time.

The issue was rated A1 by Moody's and AA-minus by Standard & Poor's Corp. Salomon Brothers Inc. lead managed the issue.

Appeal of 15-Year Issues

Banks have been attracted to 15-year issues because they can swap into cheaper floating-rate funding at that maturity than when raising debt at the more typical 10-year maturity.

"You save around 10 basis points on your spread to Libor by issuing at 15 years," said Rick Schwart, senior vice president and capital markets specialist at Donaldson, Lufkin & Jenrette Securities Co.

First Union issued $200 million in 15-year subordinated notes. The issue was priced to yield 6.077%, 90 basis points over the 10-year U.S. Treasury note.

Chase Securities Inc. was lead underwriter of the issue, which was rated A3 by Moody's and A minus by Standard & Poor's Corp.

J.P. Morgan's issue of $150 million 15-year subordinated debt was priced to yield 5.832%, 62 basis points above the 10-year U.S. Treasury note.

The notes were sold through underwriters led by Kidder, Peabody & Co, and were rated AA2 by Moody's and AA plus by Standard & Poor's Corp.

Separately. Banco Santanderof Spain was rumored to be interested in issuing around $150 million or more of preferred stock in the U.S., seeking a dividend rate of 7.5%, said a capital markets source.

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