Chase Manhattan Corp., J.P. Morgan & Co., and Citicorp late Thursday launched a $1.2 billion loan for Honeywell Inc.-the company's first syndicated credit.

Minneapolis-based Honeywell will use the loan to refinance a $650 million short-term credit arranged by J.P. Morgan and Chase supporting its purchase of Measurex Corp. The credit also consolidates approximately $725 million in bilateral loans.

The loan was launched in conjunction with a two-part $550 million bond issue by Honeywell, which was led by J.P. Morgan and Bear, Stearns & Co. and co-managed by Chase-a relative neophyte in the investment-grade bond business.

The loan, however large, may do little to wake the sleepy bank loan market, which has yet to show signs of matching last year's stellar volume. Honeywell, which is an investment-grade company, will not pay banks the kind of fees associated with more leveraged credits.

Chase, however, will gain some prestige in the investment-grade bond market.

"It is important for us to support our financial institutions," said Paul N. Saleh, Honeywell's treasurer. He said he gave Chase a role in the bond deal because he is confident that the nation's largest bank will one day emerge as a bulge-bracket investment bank.

"They'll remember those folks that worked with them early on, which is the essence of a long-term true partnership," said Mr. Saleh. "There are times when corporates go through valleys as well, and we certainly want to have strategic partners out there that understand that these are temporary setbacks."

Chase, which has made significant progress in the high-yield bond business, has recently begun to win more mandates in the investment-grade world as well. Late last year, it led a $250 million 10-year bond issue for the GoodYear Tire & Rubber Co.

"I don't think investment-grade deals are as high a priority (for Chase) as high-yield," said Raphael Soifer, a bank analyst at Brown Brothers Harriman & Co. But "if they remain strictly a high-yield underwriter, they run the risk of graduating clients into other firms as the client's financial situation improves."

Honeywell awarded another bank in its lending group-Citicorp-with the lead position in a European commercial paper program, which it plans to unveil soon.

As for the loan, Chase, J.P. Morgan, and Citicorp are seeking commitments to the $1.2 billion five-year revolving credit, to which they each committed $250 million.

The investment-grade loan has a facility fee of 6.5 basis points and an all-in spread of the London interbank offered rate plus 20 basis points.

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