Issuer: Associates Corporation of North America
Date: October 1998
Amount: $4.8 billion
Global arrangers: Bear Stearns, Warburg Dillon Read
US financial services company Associates Corporation launched its $4.8 billion Eurobond, the largest-ever global bond from a financial institution, in one of the worst market environments ever last October.The company needed to raise capital for its $3.9 billion acquisition of Avco Financial Services. Bear Stearns and Warburg Dillon Read, the joint global bookrunners, advised Associates that, despite the turbulent market, a $2 billion dollar deal could be done. Initially two $1 billion five-year and 10-year tranches were to be issued. “The marketing took off and had a life of its own,” says Bruce Widas, managing director and head of debt origination at Warburg Dillon Read in New York. The debut global transaction was split into three tranches to satisfy American and overseas investors’ wants. The five-year was increased to $2.3 billion and the 10-year to $1.5 billion. Of these tranches, European investors bought about 25%. They were priced at 142 basis points and 168bp, respectively. The third tranche, for $1 billion at 20 years. Driven by US investors, it was priced at 180bp.