Margaretten Financial Corp. said it obtained two revolving lines of credit - one for $555 million, one for $50 million - at lower interest rates than the credits they replace.
Chase Manhattan Corp. led the larger line, while First Chicago Corp. led the smaller one.
Margaretten, a major mortgage bank based in Perth Amboy, N.J., recently received its first rating for senior debt - BBB-plus from Standard & Poor's.
Close to Mandate
"Getting an investment grade rating has greatly expanded the number of banks with which we can do business," said Bruce Schnelwar, Margaretten's chief financial officer.
Separately, BankPLUS Mortgage Company of San Antonio, Tex., is close to handing out the mandate to lead a new credit package of about $375 million, according to bankers monitoring the deal.
Three bidders are said to be on the short list: Bank of New York, Texas Commerce Bank and Bank One Corp.
For Margaretten, the $555 million credit will function as a "warehouse" line. Mortgage banks use such credits to funds mortgages awaiting sale into the secondary market.
Priced at 125 basis points over the London interbank offered rate, it replaces a $374 million loan, priced at 150 basis points over Libor, according to bankers close to the deal. The new line matures in 364 days.
The deal has a 31-member syndicate, with Chemical Bank serving as co-agent.
Other Warehouse Credits
Margaretten has two other mortgage warehouse credits that total $630 million, according to Mr. Schnelwar.
Those loans, put into place at the time of Margaretten's spin-off from Primerica Inc. in 1992, were led by ABN AMRO Bank and National Westminster Bank PLC.
Margaretten's new $50 million credit partially replaces debt incurred during the 1992 acquisition of a servicing business from NationsBank Corp.
The credit matures in one year and two months, and is earmarked for general corporate purposes. The loan is priced at Libor plus 150 basis points, according to bankers. That is 75 basis points less than rate on the acquisition credit.
Banks coming into the First Chicago credit include NationsBank, Bank of Montreal, Canadian Imperial Bank of Commerce and Bank of New York, sources said. Deal HighlightsBorrower: Margaretten FinancialAmount: $555 millionPurpose: To fund originationsAgent: Chase ManhattanCo-agent: Chemical BankMaturity: 364 daysPricing: Libor plus 125 basis points