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Investors look for safe story

Best High Grade issue Issuer: Conagra Amount: $1.65 billion Date: September 15 2000 Bookrunner: Merrill Lynch

Conagra's multi-tranche $1.65 billion deal was just what investors were looking for. Here was a high triple-B-rated company, in a stable industry which taps the debt markets only infrequently - its last deal was in October 1998. And the timing was right for investors as well. "Investors were looking for a company where they knew they wouldn't stay awake at night worrying about the credit risk," says Paul Nagle, managing director of debt capital markets at Merrill Lynch. "Investors had been flush with cash for some time, and here safe company coming in a sector which had seen very little issuance all year."

Conagra is the number one food service supplier in the US and number two supplier to grocery stores. But the company is also the owner of 33 brands, and has spent the last few years emphasizing this side of the business.

Lead manager Merrill Lynch made that one of the main stories for the deal to put to investors. Conagra is not a well-known name, but many of its products are, such as Ready Whip, Healthy Choice, Bumble Bee Tuna, and Orville Redenbacher's.

The reason for the deal was to replace the more expensive loans and commercial paper which Conagra had used for its acquisition of International Home Foods, which closed towards the end of August.

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