Strong buying interest, and not just from the usual suspects, drove yesterday's Republic of Argentina's global bond of offering to $1 billion.

Crossover buyers from the investment grade ranks -- not high-yield or emerging market mutual funds -- consumed the biggest percentage of the offering in North America, as well as the biggest share overall, according to James Quigley, managing director of Merrill Lynch & Co.'s global debt syndicate. Merrill Lynch underwrote the offering together with Salomon Brothers Inc. and Banco Rio de la Plata.

According to market rumors, the offering, which was increased from $750 million, drew enough demand to lift it to $1.4 billion.

"I think the market is leading the rating agencies on this one," Quigley said.

Argentina issued $1 billion of 8 3/80/0 global bonds due Dec. 20, 2003. The noncallable bonds were priced at 99.368 to yield 8.47% or 280 basis points more than comparable Treasuries. Moody's Investors Service gave the offering a B1 rating, while Standard & Poor's gave it a BB-minus.

Duff & Phelps Credit Rating Co. assigned the highest rating at BB. Fitch Investors Service did not rate the bonds.

The deal was priced at 9:30 a.m., broke syndicate at 10 a.m., and immediately afterward the spread on the bonds tightened to 278 bid, 277 offered. By midafternoon, they had tightened by roughly four basis points from the original pricing.

The deal was distributed in Argentina, North America, Europe, and the Far East, with the lion's share in North America.

Keys to the deal's success, Quigley said, were strog road show efforts and Argentina's ability to broadcast its improving economic story. Road shows were held in Hong Kong, Tokyo, Singapore, London, and eight U.S. cities, he said.

When Argentina first announced its offering, the market envisioned the deal attracting mainly junk and emerging markets buyers. The deal was expected to be priced to yield 300 or more basis points more than comparable Treasuries, Quigley said.

"A reasonable percentage of our distribution was to the investment grade buyers who really crossed over to buy the deal based on their perception of an improving credit in 1994," Quigley said.

"I liked it," said Barbara Kenworthy, a portfolio manager at Dreyfus Corp. who bought the bonds.

Argentina will probably be the next to benefit, after Mexico, from the North American Free Trade Agreement, Kenworthy said. The country has a relatively stable government and has made sufficient improvements in the domestic economy, so domestic revolt is less likely, she said. In fact, Argentina's situation is preferable to Venezuela's, Kenworthy said, because the Venezuelan working people feel excluded from improvements there.

Kenworthy also liked the deal because it was a Yankee, global issue of substantial size. The $1 billion issue allows some of the bigger institutions to participate in the offering, she said.

"It's going to be a benchmark issue," she said, adding that the deal was also fairly priced. Kenworthy also liked that the deal was not increased beyond $1 billion.

"It didn't saturate the market," she said.

In secondary trading, spreads on high-grade issues and junk bond prices ended unchanged.

New Issues

Ford Motor Credit issued $300 million of 6.375% notes due 2005. The noncallable notes were priced at 99.638 to yield 6.419% or 77 basis points more than 10-year Treasuries. Moody's rates the offering A2, while Standard & Poor's rates it A. Lehman Brothers was lead manager.

Scotsman Group Inc. sold $165 million of 9.50% senior secured notes due 2000 at par. The notes, which are callable after four years at a premium, were rated B1 by Moody's and BB-minus by Standard & Poor's. BT Securities was lead manager.

PHH Corp. issued $50 million of floating rate notes due Dec. 16, 1994. The notes were priced initially at par and float weekly at 10 basis points more than the year Treasury bill. They pay quarterly. Goldman, Sachs & Co. was sole manager.

Columbia Healthcare Corp. came to market with a two-part offering totaling $300 million. The first tranche consisted of $150 million of 6.125% notes due 2000. The noncallable notes were priced at 99.803 to yield 6.16% or 80 basis points more than comparable Treasuries. The second piece consisted of $150 million of 7.50% debentures due 2023. The noncallable debentures were priced at 99.175 to yield 7.5% or 125 basis points more than comparable Treasuries. Moody's rates the offering A3 while Standard & Poor's rates it BBB-plus. Morgan Stanley & Co. was lead manager.

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