John E. Mack had held back the launch of a 20-year debt issue for about three weeks, waiting for the right strategic moment.
The NationsBank treasurer wanted to be sure the deal was well sold and reasonably priced.
The last unknown was a 10 a.m. Commerce Department report last Tuesday on new home sales. A report showing unexpected economic strength could result in a "hung" deal - trader parlance for an issue that investors shun.
As the hour approached, the 48-year-old treasurer politely excused himself from a meeting at his office in NationsBank's headquarters building in Charlotte and strolled to the trading floor at an annex where the expanding capital markets team is based.
The capital needs of NationsBank's nonbank finance company and approximately $1 billion in maturing debt has made the trip a frequent one for Mr. Mack, who has launched $3.55 billion of debt in 1995, well above the $1.16 billion of last year.
Indeed, bank treasurers in general are expected to turn more often to the debt market as lending opportunities outpace deposit growth.
Mr. Mack, who has been treasurer for seven years, has the final call on pricing and size of such issues - as well as the timing.
Although he originally planned to offer the subordinated debt in early August, a selloff of 30-year Treasuries and an unreceptive market led him to hold off.
Now, Mr. Mack had decided, would be a good time to pull the trigger. The period before Labor Day looked like an opportunity, he said - a quiet week when his issue might get more attntion from investors. "It turns out that was the case."
Mr. Mack likened the process of bringing debt to market to a chess match, where players have to think several moves ahead.
"I'm very relaxed about the process," he said. "I know I'll get what I want if I'm a little bit patient. I sit down and say that when it happens, it happens."
The first point of debate when he arrived on the trading floor was the precise timing of the issue. To give California investors a chance to grab a piece of the first-come-first-served deal, the syndication team advocated a 10:15 a.m. launch.
But the soft-spoken Mr. Mack pushed for a launch at 10:10, so that NationsBank's deal would be the first piece of news to reach investors after the report on new home sales.
Mr. Mack also decided on a price of approximately 100 basis points over the 30-year Treasury. The tighter the spread over Treasuries, the cheaper the bond is to the issuer. But tighter spreads provide smaller coupons, so the issuer must be appealing to the market to sell at a tighter price.
The 100-basis-point spread over Treasuries was 3 to 5 basis points tighter than an earlier 25-year issue by NationsBank that had 20 years remaining.
When word arrived that the Commerce Department had reported a 0.4% increase - within the range of expectations - the Charlotte-based syndicate team and their Wall Street co-leads were ready to move ahead and launch the deal.
The reception was strong, with commitments for almost 50% of the face value of the deal arriving in the first half hour.
When it was clear the deal was moving well, the mood lightened and Mr. Mack took some good-natured ribbing over having lost two cars to flooding after a heavy thunderstorm.
"Can I get a ride to work with you?" one capital markets expert asked.
In less than an hour, the deal was oversubscribed and Mr. Mack decided to increase the size to $350 million, while targeting a price of 98 basis points over comparable Treasuries.
Mr. Mack apparently played the capital markets chess match well.
"He priced the deal properly, so it blew out the door," Katharine Rossow, a managing director of financial institutions at Furman Selz Inc., said later. "It's one of the best-structured, best-priced deals I've seen in a long time."
Ms. Rossow said that the deal tightened to 92 basis points over Treasuries the next day, something of a gift to investors.
A blow-out deal generates positive momentum for the company name, said Ms. Rossow, which can help with the inevitable next debt issue.
"A lot of deals can be used as a building block for the following deals," said Mr. Mack. "You have to think strategically, not just about one deal."
In addition to attention to the previous issues, investors have focused each issue this year on the same acquisition rumors that have depressed NationsBank's stock price.
"Earlier this year, we did a $3 billion shelf registration," said Mr. Mack. "There was some speculation about what that was for. The fact is, that was just to fund our identified needs in the growth of the nonbank finance business plus existing materials. There was no acquisition money in that," he said.
The shelf hasn't been the only capital action to catch the attention of a market convinced that NationsBank will join the merger fray.
This year, the bank entered the Eurobond market for the first time with a $500 million issue. The bank is in the process of putting together a European medium term note program that may be on the same magnitude as the domestic program.
Mr. Mack said, however, that the European issues and others have helped provide a diversified source of funds for the nonbank finance company.
Although the rating agencies normally like European deals, their typical target for Tier 1 capital is 8% - a bit above NationsBank's current level of 7.5%.
Mr. Mack, however, said that the current ratio at NationsBank is appropriate for the company's business mix.
"Two thirds of our company consists of the general bank," said Mr. Mack. "That's a really broadly diversified group of customers, both geographic and in many other ways. That broad diversification is good business. I don't think you need as much capital to support that kind of business."
Despite reaching into other businesses and other regions, Mr. Mack remains proud of his own and the bank's southeastern origin.
"We think we're in the part of the country we want to be in," he said. NationsBank has a local presence in seven of Site Selection Magazine's top 10 markets for new facilities and new manufacturing businesses.
"We view our part of the country as being very desirable economically. The economy is good, growing, and dynamic," he said.
As far as his own growth, Mr. Mack sees opportunities to continue meeting the challenges of a job that changes from year to year.
"I've had the same job for seven years," said Mr. Mack. "But the job changes drastically every year."
The constant in Mr. Mack's job is the need to have access to funds, which mandates paying close attention to serving the bank and its investors.
After 22 years at the company, he said, he has cultivated a reputation for not having underpriced deals.
For now, NationsBank appears to have positive momentum from its new 20- year debt issue.
Keeping that momentum is paramount to Mr. Mack's success in his treasury function.
Said Mr. Mack: "I always knew there was going to come a time when I needed to raise a lot of money and I can't be in a position where I have to tell my chairman I don't have access to money."