BankAmerica Corp. joined the trend toward floating-rate subordinate debt with a $150 million issue on Monday.

The 10-year subordinate issue, priced at par, has a yield that floats at 5 basis points over the London interbank offered rate, with a minimum rate of 4.20% called a "floor." Three-month Libor is currently 3.25%.

First Boston was lead manager of the issue, which rated A3 by Moody's Investors Service Inc. and A-minus by Standard & Poor's Corp. It is noncallable for life.

With the BankAmerica issue. six banks have sold a total of $900 million of "floored" floating-rate subordinate debt issues this quarter, according to Securities Data Co. This is about half the $1.9 billion of publicity issued subordinated debt by banks this quarter in the U.S. market.

Attractive Features

Floored floating-rate debt attracts investors with its minimum guaranteed rate, which may float upward if prevailing rates rise.

Issuers opt for floored floaters because they can be a less expensive source of floating-rate funds than offering a fixed-rate issue and contracting for a floating-rate payment stream. The structure was launched on July 8 in a $150 million issue by Chase Manhattan Corp. that was managed by Bear, Stearns & Co.

Elsewhere in the market, First Hawaiian Inc. on Monday issued $100 million of fixed-rate subordinated debt.

The seven-year notes were priced to yield 6.30%, 87.5 basis points over the seven-year Treasury note. Goldman, Sachs & Co. was lead manager of the issue, which is rated Baal by Moody's and BBB-plus by Standard & Poor's.

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