The $5.5 billion bond deal that the Republic of Italy plans to price today is the "largest underwritten capital markets transaction of its kind in any currency," a source familiar with the offering said.

Italy launched its two-part global offering yesterday, and pricing is expected this morning, according to another source, Alberto Giovannini of the Italian Treasury.

The deal is also the biggest U.S. dollar-denominated global bond offering, he said, outdistancing the Province of Ontario's $3 billion deal, Giovannini said.

"We observed tremendous over-subscription to the 30-year deal and a fantastic reception of the 10-year deal," he said.

The 30-year piece drew particularly strong interest because of "the novelty of it," Giovannini said. The tranche marks the first 30-year U.S. dollar-denominated global bond offering ever by a sovereign nation, he said.

The offering consists of $2 billion of 10-year bonds and $3.5 billion of 30-year bonds. The 30-year tranche was increased from $3 billion because of strong demand.

Price talk on the 10-year piece calls for a yield of 62 to 64 basis points more than comparable Treasuries. Talk on the 30-year piece is 80 to 82 basis points over, Giovannini said.

Both tranches are expected to be noncallable. Moody's Investors Service is expected to assign an Al rating, while Standard & Poor's Corp. is expected to give it an AA rating.

Italy chose this type of offering "because of the depth and the centrality of the U.S. dollar global bond market," Giovannini said.

In other news, Columbia Healthcare Corp. has sweetened tender offers for two series of its debt.

The company issued a release yesterday announcing plans to change to existing tender offers and related solicitations of co all $100 million of its 107/8% senior subordinated notes due 2002 and $135 million of its 11 1/2% notes due 2002.

Columbia Healthcare officials decided to increase slightly the company's offer in an effort to complete the deal within the third quarter, according to Stanley J. Kay, a spokesman for the company. The decision came after discussions with some of the major noteholders, he said.

Following the merger that formed Columbia Healthcare from the union of Columbia Hospitals and Galen Health Care Inc., the investment-grade company now wants to get rid of the high-yield debt as well as the indentures governing it, Kay said.

The merger took effect on Sept. 1, Kay said.

Assuming certain conditions are met, Columbia is now offering to buy back the 10 7/8% notes or $1,183.75 in cash for each $1,000 principal amount. That compares with the original offer of $1,177.50 made Sept. 1. The company is now offering $1,213.75 in cash per $1,000 principal amount of the 11 1/2% notes. The original offer price was $1,207.50.

As described in the original purchase offer, the company will make cash consent payments of $20 per $1.000 principal amount for consents delivered on or before the consent date. It will also pay accrued interest up to, but not including. the payment date for both series. The new offer expires at midnight eastern daylight time on Sept. 30, unless it is extended.

Elsewhere yesterday, Abbott Laboratories said it has filed a shelf ration with the Securities and Exchange Commission covering $500 million of unsecured debt.

The filing includes an initial offering of up to $500 million of medium-term notes with maturities ranging from nine months to 30 years.

Also filing with the SEC was James River Corp., which yesterday filed a registration statement for up to $400 million of debt.

The company said it would use at least $300 million of the net proceeds of the offering to repay outstanding revolving credit borrowings, commercial paper, or short-term borrowings. It may also use those funds for general corporate purposes, which could include capital expenditures and working capital requirements.

The remaining $100 million of proceeds may be put toward James River's earlier disclosed obligation to buy for $200 million all of the ownership interest in Diamond Occidental Forest Inc. that it does not already hold. The purchase is slated for November. Proceeds for the sale of some Diamond timberlands, expected to total $100 million, will also be put toward the purchase.

In other news, U S West's $2.5 billion strategic partnership investment in Time Warner Entertainment closed yesterday, the two companies said. The investment was announced in May.

Time Warner Entertainment principally encompasses Warner Bros., Home Box Office, and the Time Warner Cable businesses. Time Warner now holds 63.27% of the Time Warner Entertainment pro rata equity, while U S West holds 25.51 % and ITOCHU and Toshiba hold the rest.

In secondary trading, spreads on high-grade issues ended unchanged while junk prices slipped 1/4 point in sympathy with Treasuries.

New Issues

Federal Home Loan Mortgage Corp. issued $250 million of 4.50% step-up notes due 1998 at par. The notes were priced to yield 32 basis 1/4 points over five-year Treasuries. The notes are noncallable for two years, after which the coupon steps up to 5.5%. The internal rate of return is 5.07%. Merrill Lynch & Co. was sole manager for the offering.

FHP International Corp. issued $100 million of 7% notes due 2003 at par. The noncallable notes were priced to yield 155 basis points more than comparable Treasuries. Moody's rates the offering Baa3, while Standard & Poor's rates it BBB-minus. Smith Barney Shearson was lead manager.

Federal Home Loan Banks issued $100 million of floating-rate notes due 1995 at par. The notes float quarterly at 260 basis points under the prime rate. They pay quarterly. Lehman Brothers was sole manager.

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