Low interest rates, tight spreads, and funding needs have prompted a spate of debt issuance by banks and investment banks.

BankAmerica Corp. came to market early last week with $250 million in five-year senior notes and added $250 million of 10-year notes on Monday; Bankers Trust New York Corp. followed with $150 million of 12-year subordinated notes; Citicorp issued a total of $65 million in 10-year and 15-year notes; and Salomon Brothers Inc. issued $250 million of five-year senior notes.

"Banks need to fund their balance sheets because core deposits are not sufficient," said Ethan M. Heisler, an analyst with Salomon Brothers. "Although the (interest) rates are not as favorable as two months ago, they are still fairly strong."

The pricing of BankAmerica's issue of five-year senior notes - 32.5 basis points over comparable Treasuries - was viewed as appropriate by analysts. The 10-year issue was priced at 57 basis points over Treasuries.

"They are getting nice cheap debt," said Katharine Rossow, an analyst with Furman Selz. "The price is right for their funding base."

BankAmerica's five-year notes, which are noncallable, were priced at 99.895 to yield 6.675%. The 10 year notes were priced at 99.918 to yield 7.137%.

Duff & Phelps Credit Rating Co. assigned a rating of A-plus to the five- year issue, citing the bank's "solid core profitability" and its strong business mix, including a "strong consumer and middle-market banking franchise throughout California and the Pacific Northwest."

Analysts viewed the pricing of Bankers Trust's $150 million issue of subordinated notes as an improvement.

With Smith Barney Inc. as underwriters, the the noncallable issue was priced at 87 basis points above comparable Treasuries. "It was a good price," said Ms. Rossow.

Bankers Trust issued debt "in the 100-basis-points range earlier this year for 10-year and 12-year, and I would anticipate that it will continue to tighten 7 to 10 basis points," she said.

Sheryl Harrison, an analyst with PNC Institutional Investment Services, said banks have been able to issue debt with longer maturities - like the Bankers Trust 12-year notes - because their credit quality has improved.

Duff & Phelps, which placed Bankers Trust on credit watch earlier this year, rated the new issue A-minus. The agency expressed concern about the bank's derivatives troubles, but said the elevation of Frank Newman to chairman and chief executive was a positive factor.

The $50 million of 10-year Citicorp senior debt was priced to yield 7.04%. Citicorp's $15 million of subordinated debt maturing in 15 years was priced to yield 7.25%.

Salomon Brothers issued $250 million of senior notes, which were priced at 100 basis points over comparable Treasuries.

The issue, which will mature May 1, 2000, has a coupon of 7.25% It was priced at 99.863 to yield 7.283%.

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