Norwest Corp. this week tapped one of its superregional banking rivals to bring a $200 million issue of medium-term notes to market.
Norwest's use of NationsBank Corp.'s capital markets unit illustrates a growing trend as commercial banks make inroads in investment banking.
NationsBank is one of the biggest underwriters of publicly traded bank debt among commercial banks boasting section 20 powers.
The Charlotte, N.C., superregional is second only to J.P. Morgan & Co., which has been lead manager on $7.8 billion worth of bank debt deals this year, according to Securities Data Co. NationsBank has led $4.2 billion worth of bank debt deals.
"Bank-versus-bank is not as great" a concern "as it was 20 years ago. Pricing gets the business," said Charles D. White, treasurer of Norwest. "We have done a lot of business with NationsBank - commercial and trust business. We have had a relationship with them for 20 years, maybe more."
Mr. White noted that other banks have also have participated in underwriting Norwest bank debt, including units of First Union Corp., Citicorp, and the former Chemical Banking Corp.
Bob Hugin, managing director of fixed-income corporates at J.P. Morgan, said financial institutions "are an important sector of the market and are not viewed today as they were five years ago.
"The banking sector is viewed as a safe harbor for investors, unlike the perception of five years ago. Therefore, it is an opportunity for underwriters," he said.
Some analysts pointed out that a large percentage of the bank paper underwritten by NationsBank is its own.
Mark Wilson, a trader at Nationsbanc Capital Markets, noted, however, that "even if you took out NationsBank's own deals, financial institutions have been one of our dominant sectors."
Other sectors include media and energy and textile companies, Mr. Wilson said.
NationsBank has underwritten debt issues for Harris Trust and Savings Bank, BB&T, and the bank unit of KeyCorp, among other banks, he added.
Traders said Norwest got a good price from NationsBank, which is known as an aggressive bidder for market share.
The Norwest issue - $200 million of 10-year medium-term notes - was priced at 99.338 to yield 6.968%. The spread widened from the underwriting price of about 45 basis points over Treasuries to 52 basis points.
Mr. White said the deal "was one of the tightest Norwest spreads that we have been able to issue in 10-year debt."