A State of Israel offering yesterday generated $1 billion of proceeds that the nation will use to help Eastern European immigrants settle there.

"It sold very well." a source familiar with the sale said. The multitranche deal came within price talk, he said, though toward the wider end.

"The market has been difficult," the source said, adding that getting the deal done inside the price talk at all was an accomplishment.

The four-part offering included $1.55 billion face amount of zero coupon bonds, proceeds from which totaled $430 million.

"That was the most economical structure for them," the source said, when asked why Israel chose the multipart deal.

The first tranche consisted of $171.69 million of 4 7/8% bonds due Sept. 15, 1998. The noncallable bonds were priced at 99.767 to yield 4.928%, or 10 basis points more than comparable Treasuries.

The second tranche held $200 million 5 1/4% bonds due Sept. 15, 2000, The noncallable bonds were priced at 99.423 to yield 5.35% or 20 basis points above Treasuries.

The third tranche consisted of $200 million of 5 5/8% bonds due Sept. 15, 2003. The noncallable bonds were priced at 99.583 to yield 5.68%, or 22 basis points more than comparable Treasuries.

FIPS Delayed

"Software bugs" have put the debut of the National Association of Securities Dealers Inc.'s junk bond quotation and surveillance system six to eight weeks behind schedule, an NASD official said yesterday.

The system is called the Fixed-Income Pricing System, or FIPS.

During a demonstration for the press, Bill Broka, NASD's vice president of trading and market services, said the software glitches, though not major, led NASD to change earlier plans to deploy the screen-based system in September for full use in November.

The system will now be deployed in November. A test run will take place in January, and the system should be in full use later that month, he said.

FIPS is designed to increase transparency of junk bond prices and provide better surveillance. The system is an outgrowth of a letter the Securities and Exchange Commission wrote to the NASD expressing concerns Congress raised about the junk market, Broka said.

The system, scheduled to begin with 35 of the most actively traded high-yield issues, may contain up to 50 such issues by yearend.

Securities used will be those that Standard & Poor's rates BB-plus or lower, Broka said.

To become a FIPS dealer or broker, NASD members must apply for authorization through Nasdaq, according to NASD literature. Once authorization is received, the participant can start quoting FIPS securities by registering each FIPS security through the terminal.

If, however, a dealer or broker no longer desires to trade in a certain security, the participant can end his or her registration in that bond, while preserving registration in other FIPS securities.

FIPS dealers can enter quotes under their own name, or if they do not want to disclose their positions, through a FIPS broker.

The NASD will require members to report all transactions involving FIPS securities within five minutes of execution. Trades in all other junk bonds may be reported anytime between 9 a.m. and 5 p.m., eastern time, on the trade date.

Responsibility for reporting trades varies depending on the role each participant plays in the transaction. For instance, when a FIPS dealer and a FIPS broker are involved, the broker reports the trade. If two FIPS dealers are involved, the sell-side dealer reports it.

While Broka acknowledges that "not everyone is welcoming this with open arms," earlier resistance appears to have mellowed, Broka said.

Broka demonstrated the system earlier this week for approximately 90 potential subscriber representatives, mainly compliance people.

The NASD is trying to design the system so its doesn't substantially change the way market participants do business.

"We've worked three years with the high-yield bond trading community to get where we are today," he said.

While the NASD will monitor the system for improprieties, for now, the association is looking at the process as an educational one.

"We're very sensitive to the fact that people are in a new environment," Broka said.

The price for the full-function system costs $650 a month for the leased line and the router equipment per firm and $350 million a month for each workstation. Fees decline from there depending upon the level of service requested.

In secondary trading, spreads on high-grade issues widened by five to 10 basis points. High-yield issues ended unchanged.

New Issues

Southern California Edison issued $200 million of 6.90% first and refunding mortgage bonds due 2018. Noncallable for five years, the bonds were priced at 97.617 to yield 7.105%, or 85 basis points over comparable Treasuries. Moody's rates the offering Aa3, while Standard & Poor's rates it A-plus. A Lehman Brothers-led group won competitive bidding to underwrite the offering.

Southern California Edison issued $200 million of 5 5/8% first and refunding mortgage bonds due 2002. The noncallable bonds were priced at 98.444 to yield 5.85%, or 40 basis points over comparable Treasuries. The offering is rated Aa3 by Moody's and A-plus by Standard & Poor's. A Salomon Brothers-led group won competitive bidding to underwrite the offering.

Province of Newfoundland issued $200 million of 7.32% debentures due 2023 at par. The noncallable debentures were priced to yield 103 basis points more than comparable Treasuries. Merrill Lynch & Co. was lead manager of the offering.

NVR Inc. issued $160 million of 11% senior notes due 2003 at par. Noncallable for five years, the notes were rated B2 by Moody's and B by Standard & Poor's. Bear, Stearns & Co. managed the offering.

State Street Boston Corp. issued $100 million of 5.95% senior notes due 2003. The notes were priced at 99.625 to yield 6%, or 55 basis points more than comparable Treasuries. Moody's rates the offering A 1, while Standard & Poor's rates it AA-minus. Goldman. Sachs & Co. was sole manager of the offering.

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