Magazine article American Banker

Morgan Leads British Aerospace Unit's Bonds

Magazine article American Banker

Morgan Leads British Aerospace Unit's Bonds

Article excerpt

J.P. Morgan & Co., rising rapidly as an underwriter of investment-grade bonds, is leading a $700 million issue for British Aerospace Finance Inc., a Delaware unit of a leading European defense manufacturer.

The issue, priced Thursday, was split into two parts: $200 million of 10- year notes priced to yield 7.039%-58 basis points more than Treasury securities-and $500 million of 30-year instruments priced to yield 7.563%, or 78 basis points over Treasuries. Moody's Investors Service rated the issue A-3, and Standard & Poor's gave it an A rating.

The issuer, a unit of Hampshire, England-based British Aerospace PLC, had planned to raise only $500 million but bumped up the amount in response to strong investor demand. Even at the larger size, the issue was two times oversubscribed, market sources said.

It was co-managed by Lehman Brothers, CS First Boston, NationsBank, and UBS Securities.

While many U.S. commercial banks are making inroads in the high-yield bond market, only a handful are cracking the investment-grade market. And Morgan is far ahead of the others.

"We distinguish ourselves from other commercial banks in the sense that we've been a leader in the securities business for many years," said John Massad, head of Morgan's debt syndicate.

Among all underwriters of investment-grade bonds, Morgan climbed to fourth place in 1996 from seventh in 1995, according to Securities Data Co. And it is on track to win the No. 2 spot, behind Merrill Lynch & Co., for the first half of this year.

"Morgan is destined to become more powerful," said analyst George Salem of Gerard Klauer Mattison. …

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