In the midst of a rocky, volatile capital markets environment, CVS Corp. found success with it's recent $75 million lease-backed private placement offering. In fact, the company tacked on an additional $15 million - raising the stakes to a $90 million final tally.

The transaction, agented by J.P. Morgan, was snatched off the shelves by about five institutional investors last week. The lease-backed notes have a 22-year final maturity and a 15-year average life.

According to sources, the credit tenant lease was initially backed by about 27 new CVS retail stores, however, as the deal successfully upsized last week, it will probably involve about 34 stores.

Widening from original talk, it priced at a monthly rate of 226 basis points over the 10-year Treasury note, or an annual spread of 240 basis points over, sources said.

While a number of investors had a difficult time getting comfortable with the structure and the retail industry, at least five investors found value in the securities.

"As always, there's a narrow market for these structures," said a source familiar with the deal. "Some like it and others don't."

CVS has a credit rating of A3 from Moody's Investors Service and single-A from Standard & Poor's Ratings Service.

The largest retail provider of prescriptions in the nation the company has over 4100 stores in the Northeast, Mid-Atlantic, Midwest and the Southeast. In June 1999, the company completed its acquisition of in a move to step up its Internet presence.

It reported revenue of $18.1 billion in 1999.

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