NEW YORK - An infrequent issuer into the capital markets, U.S. Bancorp Wednesday launched $300 million of 10-year subordinated debt.

The price was 73 basis points over comparable Treasuries. Analysts said the price was fair for investors, given the current price compression for bank debt.

Bank debt is trading at the smallest premium to Treasuries ever, said Allerton G. Smith, a bond analyst at Donaldson, Lufkin & Jenrette. "That's about the right level for an A3/A-minus credit today," he said, referring to U.S. Bancorp's current debt ratings from Moody's Investors Service and Standard & Poor's Ratings Group, respectively.

"There's some scarcity value in the U.S. Bancorp name," said Jay Weintraub, a bond analyst with Merrill Lynch, pointing out that U.S. Bancorp hadn't issued debt for two years.

An infrequent issuer like U.S. Bancorp presents an opportunity for investors to diversify their portfolios, analysts said.

"As we face some mergers, we may find some insurance companies filled up with the Chases and Chemicals," said a bond analyst. "That's where the real appeal of this deal is."

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