Lehman Brothers Inc. came to market with a tightly priced issue of $200 million in senior subordinated notes.

The notes, which have a 30-year maturity, also carry a put option, allowing investors to redeem them in the seventh year.

"Lehman Brothers saved 13 basis points by doing a put bond," said a Lehman syndicate official adding that the issue sold out within an hour last Thursday. Investors most interested in the notes are insurance pension funds, state funds, and mutual funds, the official said.

The company's spreads "have tightened over the course of the year," the official said.

The issue, which Lehman underwrote itself and which is its fourth this year, was priced at 99.752 to yield 7.546%, or 79 basis points above the seven-year Treasuries.

It was rated Baa-1 by Moody's Investors Service Inc. and A-minus by Standard and Poor's Corp.

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