WesCorp sells $1.5 billion in three-year notes

NEW YORK and WASHINGTON (10/29/09)--Western Corporate (WesCorp) FCU Wednesday sold $1.5 billion in three-year government-guaranteed notes, according to IFR, a Thomson Reuters news service.

The National Credit Union Administration Wednesday morning confirmed that the $18 billion asset, San Dimas, Calif.-based WesCorp was offering the notes guaranteed by NCUA under the Temporary Corporate Credit Union Liquidity Guarantee Program.

J.P. Morgan and Bank of America were to serve as lead underwriters for the issuance, according to John J. McKechnie III, NCUA's director of public and congressional affairs, said Wednesday morning.

The medium term notes (MTN) issuance secures another source of funding to ensure bonds can be held to recovery, McKechnie said in an e-mail to News Now staff. "Given that much of the current corporate funding is short-term, the MTN issuance will enhance stability," he said. "The issuance is part of a normal process to maintain a balanced asset/liability mix, McKechnie said.

According to Reuters, the 1.75% notes were priced at 99.875 to yield 1.793%, or 35.9 basis points over comparable U.S. Treasuries.

Earlier this month, U.S. Central FCU, Lenexa, Kan., completed a similar offering of $4 billion in MTN. That issuance was completed Oct. 14.

Several corporate credit unions have issued debt in the form of commercial paper. Both U.S. Central and WesCorp had previously issued MTNs.

In other developments, Corporate America CU, based in Birmingham, Ala., filed a lawsuit Oct. 20 in a U.S. District Court in Alabama alleging that U.S. Central forced it to buy $9 million in paid-in-capital shares in U.S. Central several weeks before NCUA required U.S. Central to write down its mortgage-backed securities by $1.2 billion and injected $1 billion into the corporate (Kansas City Star Oct. 26).

Three months after Corporate America CU bought the securities, federal regulators placed U.S. Central into conservatorship.

NCUA's Corporate Stabilization Plan