Magazine article American Banker

Margaretten Cuts Its Funding Costs with Two Revolving Credit Lines

Magazine article American Banker

Margaretten Cuts Its Funding Costs with Two Revolving Credit Lines

Article excerpt

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. …

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