International Business Machines Corp.'s $12 billion credit line, led by Chemical Bank, was almost fully underwritten as of late Wednesday.

IBM's ability to get the new credit was never in doubt, but there was no assurance that the deal would be fully underwritten in the first phase of the syndication, which just ended.

The credit will be marketed to a broader group of lenders at a meeting scheduled to be held today in New York.

"It obviously helps the momentum to say the deal is fully underwritten," said an official at a bank that declined to take an underwriting position.

Critical Step

The outcome of the second phase of the syndication is critical to the underwriting banks, because it will determine how much of their initial commitments they will be left holding.

Chemical committed about $1 billion, and most of the other banks committed $500 million apiece.

It's expected that another $5 billion to $6 billion will be raised in the second round of the syndication. If that's the case, then the underwriters each will be left with about $250 million to $300 million of their original commitments, one banker calculated.

Early Doubts

Earlier in the week. it appeared that IBM and Chemical might have trouble raising the entire amount of the credit ahead of today's meeting.

As of Monday - one day before the official deadline for banks wishing to participate as coagents - less than half of the $12 billion had been raised.

Among the banks that passed on the deal were Barclays Bank, Citibank, NationsBank, and Bankers Trust, sources said.

Despite widespread complaints about low underwriting fees, several sources said they were surprised that these banks rejected the deal, given the importance most banks attach to their relationship with IBM.

In addition to complaints about fees, some bankers also expressed concern about IBM's long-term prospects.

The $12 billion credit doesn't expire for five years, so banks will be hitched to IBM's fortunes for some time to come.

Credit Downgraded

Already this year, IBM's credit rating has been knocked down to A from AAA, and the company remains under enormous financial and technological pressure.

Still, IBM has its supporters in the banking community, and on Wall Street.

On Tuesday, for example, a major brokerage house issued a "buy" recommendation on IBM, which sent the stock soaring $3.125 a share. to close at $50.875.

Coagents on the new IBM credit include Bank of America, Chase Manhattan Bank, Morgan Guaranty Trust Co., and PNC Bank, sources said. The deal was also supported by Japanese, French and Canadian banks, and by Credit Suisse, sources said.Term of the Deal(*)Borrower IBMLead bank Chemical BankAmount $12 billionLife 5 yearsFront-end $250,000 plus 10fee basis points on final allocationFacility fee 15 basis pointsSpread 31.25 basis points over Libor (*) Based on commitments of $500million. Spread and facility fee subjectto change based on IBM's credit rating.

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