Banks are set to raise $1 billion of Tier 2 capital this week.

Citicorp, Society Corp., and Wesdeutsche Landesbank Girozentrale are on tap for intermediate-term subordinated debt.

Market sources also expect offerings from at least one other regional bank and one other foreign bank.

"It's going to be very busy week, not just for banks but across the board," said one investment banker. "We have a very well rounded calendar for this week."

There has been no new bank subordinated debt since May 26, when Bank of Hawaii sold $125 million of 10-year notes.

A Brief Hiatus

Many corporate issuers took a holiday in the week ended June 3, selling only $2.4 billion in new bond deals, the lowest total of the year, according to Securities Data Co.

The weekly average for corporate debt has been $8 billion since the start of this year.

The German bank, known as WestLB, will issue $500 million of 12-year subordinated debt through underwriters led by Goldman, Sachs & Co. The debt is expected to be priced early this week, but the proposed yield could not be determined.

"The bond markets have been pretty steady, and interest rates are at pretty remarkably low levels," said John Paul Garber, one of the bank's joint chief executive for North America.

"Given the fact that an important part of the bank's book is in dollar assets, it is appropriate that part of the bank's capital would be dollar based."

Wholesale Specialty

The bank concentrates on wholesale banking businesses in North America, where it had $11 billion of assets as the end of last year.

WestLB debt is effectively guaranteed by the German state of North Rhine-Westphalia, and is rated Aal by Moody's Investors Service Inc. and AA-plus by Standard & Poor's Corp.

The bank follows Bayerische Landesbank Girozentrale, which issued $250 million of subordinated debt at yearend and Landeskreditbank Baden-Wuertemberg, which issued $300 million in this type of debt earlier this year.

In addition, Suedwestdeutsche Landesbank recently filed a shelf registration with the Securities and Exchange Commission for $250 million in subordinated notes, though the issue is not expected soon.

Sub Debt from Citicorp

Citicorp is expected to issue at least $200 million of subordinated debt this week, sources said.

The bank has not formally given a go-head for a new issue, so there is no formal underwriting group or price talk. A bank official declined comment.

Society Corp. is readying $200 million of subordinated debt that will be issued from a bank subsidiary, J. P. Morgan Securities is expected to be lead manager. Society officials did not return phone calls.

The secondary market for bank bonds has also been sleepy since before Memorial Day, but bonds are still being quoted with tight spreads to U.S. Treasuries. "It has been somewhat boring in terms of spread movement," said John Works, analyst with Keefe, Bruyette & Woods Inc.

But the Keefe index of bank subordinated debt was still strong at the start of last week, with an average yield spread of 86 basis points over Treasuries, only a few basis points from its all-time low, Mr. Works said

Continuing improvement in credit quality should contribute to a"creeping tightening of spreads," this year, said Allerton Smith, a bank debt analyst with First Boston Corp.

"Given the lack of supply across the whole corporate bond sector, three's no impetus for spreads to widen out," he said. "We still look for more upgrades than downgrades of banks looking ahead this year."

A huge supply of debt could upset this scenario, but is not likely to materialize, he said.

The bonds most likely to have tightening spreads to Treasuries are those of triple-B-rated banks that are likely to be upgraded, including Chemical Banking Corp. and Bank of Boston Corp., Mr. Smith said.

Bank of New York Co's upgrade last week by Standard & Poor's resulted in a 4-basis-point tightening in the secondary bid level of its subordinated debt to 85 basis points, Mr. Smith said.

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