No. of Recommendations: 2
It's not often that I'm willing to discuss specific issues before a trade has been closed. But the features of this one are unusual. Zions Direct is auctioning:

5-Year Senior Medium-Term Notes
Coupon: 4.50%
Maturity: March 27, 2017

Offer Size: $300,000,000
Sold in Units of $1,000

Auction opens at 8:00 AM ET, Thursday, March 22, 2012.
Auction closes at 3:00 PM ET, Thursday, March 22, 2012,
and is expected to settle on March 27, 2012 (T+3)

The offering docs are sucky:

We may not redeem the notes prior to maturity.
The notes will not be listed on any national securities exchange. Currently, there is no public market for the notes.

The public offering price and the allocation of the notes in this offering will be determined by an online auction process. During
the auction period, potential bidders will be able to place bids at any price at or above the minimum bid price of 93.000000% of the
principal amount (or conversely, a maximum yield to maturity of 6.147%) per note and up to and including the maximum bid price of
100.000000% of the principal amount (or conversely, a minimum yield to maturity of 4.500%) per note.

Currently, there are few of Zion's bonds being offered out (by which one might benchmark the bond being auctioned). But a list of all of the currently-active bonds can be pulled from FINRA.

ZION.GW ZIONS BANCORP - 06/21/2012 No Aaa AA+ AAA 100.841 -
ZION.HK ZIONS BANCORP 2.00 09/19/2012 No - BBB- BBB- 100.351 1.409
ZION.HM ZIONS BANCORP 2.25 10/29/2012 No - BBB- BBB- 100.000 -
ZION.HH ZIONS BANCORP 4.00 10/29/2012 No NR BBB- BBB- 100.000 -
ZION.HF ZIONS BANCORP 5.00 11/07/2012 No NR BBB- BBB- 101.500 2.560
ZION.HN ZIONS BANCORP 2.00 12/12/2012 No - BBB- - 99.997 2.002
ZION.HG ZIONS BANCORP 4.25 02/01/2013 No NR BBB- BBB- 101.500 2.486
ZION3822926 Zions 2.00 03/05/2013 No - BBB- - 100.000 -
ZION3822940 Zions 3.50 02/28/2014 No - BBB- - 100.000 -
ZION.GN ZIONS BANCORP 5.65 05/15/2014 No B1 BB+ BB+ 104.125 3.623
ZION.GY Zions 5.65 05/15/2014 No - BB+ BB+ 103.534 3.965
ZION.HE Zions 7.75 09/23/2014 No - BBB- BBB- 109.100 3.878
ZION.GZ Zions 6.00 09/15/2015 No - BB+ BB+ 103.226 4.975
ZION.GL ZIONS BANCORP 6.00 09/15/2015 No B1 BB+ BB+ 101.619 5.480
ZION.HA Zions 5.50 11/16/2015 No - BB+ BB+ 102.000 4.892
ZION.GO ZIONS BANCORP 5.50 11/16/2015 No - BB+ BB+ 103.750 4.372
ZION.HI ZIONS BANCORP 5.50 05/10/2016 Yes - BBB- BBB- 100.500 2.174
ZION.HJ ZIONS BANCORP 5.00 08/01/2016 Yes - BBB- BBB- 99.750 5.063
ZION.HL ZIONS BANCORP 5.25 11/07/2016 Yes - BBB- BBB- 99.625 5.339
ZION.HO ZIONS BANCORP 5.45 08/01/2017 Yes - NR - 100.000 -

As you can see, Moody's doesn't like them very much (and their report details the reasons). But another tactic is to benchmark the bond agasint whatever else is being offered out in that credit range and maturity and projected yield, which isn't much, just Icahn's 7.75's of '16, which is hugely worrisome. The bond being auctioned, if it could be obtained at 93, would be a price outlier, which raises this question.

"Why is Zions having to pay up to borrow?"

My instincts tell me that a YTM of 6-1/8 isn't worth fussing with (given that bigger money could be made elsewhere). But I could be wrong, and I'm tempted to nibble or maybe not and, instead, to deploy the cash elsewhere, because if stock prices end the day where they are now headed, in three days I'll have made from my shorts as much money as I would from holding this bond for a year. But for some accounts, a 5-year note offering 6% might be attractive, even with its onerous illiquidity.
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