Bankers Trust to Lead Group Underwriting Bond Offering

In a milestone for the banking industry, Bankers Trust New York Corp. on Thursday became the first bank tapped since the early 1930s to lead an underwriting group for a corporate bond offering.

BT Securities, the securities unit of Bankers Trust New York, has been chosen as underwriter for a $150 million offering of seven-year notes by Morningstar Foods Inc., a Dallas-based producer and distributor of dairy products.

Bankers Trust and several other major banks were given authority in recent months by the Federal Reserve to underwrite corporate debt to a limited degree.

The Fed move, which came over the objections of the securities industry, marked a major erosion of the Glass-Steagall Act, the New Deal legislation that has prevented banks from underwriting corporate bonds.

Bankers Trust and other banks have been included in underwriting groups for corporate bonds, but until now none have been designated as a lead manager, which is in charge of distributing the debt to the public.