A new Rabobank mortgage bond, whoseterms dealers considered extremely generous, was in heavy
demand on the Amsterdam bourse today, bond dealers said.
    Rabobank, not anticipating a strong two-day rally in Dutch
bonds, on Wednesday set an issue price of 99.50 pct for a 6.25
pct eight-year open mortgage bond, giving it a yield about 1/4
pct higher than the market average.
    Rabobank stopped trading in the bond five minutes after the
bourse opened, but already between 200 and 300 mln guilders
worth had been sold, a Rabobank spokesman said. One Japanese
investor took 50 mln guilders alone, a dealer said.
    Later, the bank proposed to allot only 30 pct of
subscriptions, causing a general outcry among traders. Rabobank
finally gave in to bourse demands to honour all subscriptions.
    "We simply did not expect prices to rise so much," a Rabobank
spokesman said." Since the pricing, the bond price index has
risen 0.9 to 117.3, and the average state loan yield has fallen
accordingly to 6.04 pct.
    Two weeks ago, Rabobank issued a 250 mln guilder 6.75 pct
bond at par, giving it a yield 0.40 above the average bank loan
yields that day of 6.35 pct. The issue was heavily
over-subscribed.
 REUTER
