Magazine article American Banker

First Union High-Yield Unit Takes Lead on $125M Issue

Magazine article American Banker

First Union High-Yield Unit Takes Lead on $125M Issue

Article excerpt

First Union Corp.'s high-yield group is beginning to hit its stride.

First Union Capital Markets last week priced its second lead-managed high-yield issue, a $125 million offering for Emergent Group Inc., a Greenville, S.C.-based subprime mortgage lender.

Emergent was drawn to the high-yield group through other units of the bank. First Union warehouses some of Emergent's loans and has acted as a trustee on its securitization work.

Also, when Emergent went public last year, Wheat First Butcher Singer Inc.-the Richmond, Va. securities firm that last month First Union agreed to buy-underwrote the offering.

The deal illustrates First Union's approach to the junk bond business, which is to build on the bank's business with middle- market corporate clients by providing them with junk bonds.

The bank started a junk bond shop about two years ago and hired Jay Braden from Smith Barney to head origination. Now the staff includes 45 to 50 professionals in research, sales, trading, and origination, and the bank has participated in 16 high-yield issues.

"We're just starting to scratch the surface with high-yield and will continue to further penetrate the First Union franchise" for business, Mr. Braden said.

"This is part of an overall strategy to bring better corporate finance advice and products to companies than they would otherwise see," Mr. Braden said.

Observers commended the bank's approach to the capital markets business.

"They've approached the business very aggressively . …

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