U.S. CORPORATE FINANCE - NEW ZEALAND DLR FRNS

  Floating-rate notes denominated in a
  foreign currency, a relatively new wrinkle on Wall Street, will
  probably be issued infrequently because the so-called "window
  of opportunity" opens and closes quickly, traders say.
      "In just two days we had as many issues. As a result, the
  market became glutted," said one trader.
      He said the window depends more on supply than on foreign
  exchange or interest rate risk, at least for the moment.
  "Obviously, currency risk is important. But there is a limited
  number of investors right now for the paper," he said.
      On Thursday, Bear, Stearns and Co sole-managed a 100 mln
  New Zealand dlr offering of three-year floating-rate notes
  issued by Ford Motor Credit Co, a unit of Ford Motor Co &lt;F>.
      The initial rate for the notes will be set on April 15, and
  quarterly after that, at 200 basis points below the 90-day New
  Zealand bank bill rate. They are non-callable for life.
      This followed by a week another Bear Stearns-led offering
  of the same amount of New Zealand dollar notes for Dow Chemical
  Co &lt;DOW>. The initial rate was also to be initially set on
  April 15, and quarterly after that, at 340 basis points below
  the same 90-day New Zealand rate.
      Because the Dow Chemical notes carried an interest rate
  floor of 17 pct, the issue saw strong investor demand,
  underwriters said.
      But the Ford Credit notes and Friday's offering of 130 mln
  New Zealand dlrs of floating-rate notes due 1990 issued by
  General Electric Co's &lt;GE> General Electric Credit Corp via
  Prudential-Bache Securities Inc, did not have such a floor.
      "Obviously, the two firms did not want to issue floaters
  and face the risk of New Zealand rates falling sharply," an
  underwriter away from the syndicates said. He and others noted
  that the New Zealand 90-day rate was 27 pct late last week.
      An underwriter familiar with the Dow Chemical deal pointed
  out that because of the interest rate and currency swaps Dow
  did, the issuer felt comfortable setting a rate floor.
      Domestic offerings of foreign currency denominated date
  first surfaced in Fall 1985. By using currency and rate swaps,
  companies can sell debt that pays a high interest rate in a
  foreign currency like Australian or New Zealand dollars. But
  the issuers actually realize savings on borrowing costs.
      "I would say that every company which issued foreign
  currency debt saved some basis points when compared to
  same-maturity plain vanilla U.S. issues," an analyst said.
      Investors, mainly institutions, were attracted to the early
  issues because of the high interest rates. They were willing to
  absorb foreign currency risk until mid-1986, when sharp slides
  posted by the Australian and New Zealand dollars brought such
  issuance to a quick halt.
      It was not until late last year, after the currencies
  stabilized, that companies again started issuing debt
  denominated in Australian and New Zealand dollars.
      But many investors have still shied away from the debt,
  remembering the mid-1986 downturn of the Australian and New
  Zealand dollars, analysts noted.
      To attract some of those investors back to the fold,
  underwriters like Bear Stearns decided to structure the foreign
  currency issues as floating rate debt, sources said.
      This occurred against a backdrop of uncertainty over the
  course of U.S. interest rates for the intermediate term, and
  predictions by a number of economists that Treasury yields
  would rise in the second half of the year, the sources noted.
      A Bear Stearns officer said more than half of the Ford
  Credit notes were sold by late Friday afternoon, the second day
  of offering. "That is quicker than some recent fixed-rate New
  Zealand dollar note issues," he said.
      However, underwriters away from the Bear Stearns syndicate
  said the issue may have sold even faster if Prudential-Bache
  did not offer the General Electric Credit notes on Friday.
      They pointed out that the Ford notes were rated A-1 by
  Moody's Investors and AA-minus by Standard and Poor's, while
  the General Electric notes, which had the same interest rate
  terms and were also non-callable to maturity, carried
  top-flight AAA ratings by both agencies.
      "We have sold 20 to 25 pct of the GE notes. For first-day
  sales on a Friday afternoon, I'm happy with the results," an
  officer on Prudential-Bache's syndicate desk said.
      Investors pay the U.S. dollar equivalent of the foreign
  currency-denominated notes, underwriters said.
      Investment bankers said the next floating-rate issue of New
  Zealand or Australian dollar-denominated debt is probably a few
  weeks away.
      "I would like to underwrite a deal a day. But with the Dow,
  Ford and GE offerings, the marketplace has had enough for the
  time being," the Prudential-Bache officer admitted.
      Meanwhile, IDD Information Services said the 30-day
  corporate visible supply fell to 3.29 billion dlrs last week
  from 3.98 billion dlrs in the previous week.
  

