Riggs National Corp. of Washington, an infrequent issuer of securities, plans to sell $200 million of floating-rate trust-preferred securities today, sources said.

The issue has been rated on the borderline between investment grade and noninvestment grade by Moody's Investors Service and Standard & Poor's Inc. As a result, market participants are uncertain about demand for the securities and what the price will be.

"This will be a real test," said an observer who is familiar with the deal. "This is a slightly illiquid issue and from one of the smaller banks. It will be interesting to see what the demand is."

Riggs' deal, in which Warburg Dillon Read & Co. is the lead underwriter, comes early in what is expected to be a rush by banking companies to raise capital to prepare for potential heavy cash withdrawals because of year- 2000 concerns.

Riggs is fortunate, analysts say, because it has considerable room to issue low-cost trust-preferred equity. The cost is low because of tax benefits; unlike dividends on regular preferred stock, the borrowers using trust-preferred can deduct the interest they pay from its taxable income.

Many other banking companies have filled their regulatory quota of trust-preferred equity, and consequently issuance of them has been infrequent. Yet three large banks-KeyCorp, Bank of America Corp., and Citigroup Inc.-have done equity trust-preferred in the last seven months.

In contrast, two years ago banking companies were elbowing their way to the capital markets to issue trust-preferred securities. The debt-like securities were used as an inexpensive way to restore regulatory capital. Today, most banking companies are flush with regulatory capital and so have less need to issue trust-preferred securities.

"You barely saw an issue in the fourth quarter," said Chris Orgielewicz, an analyst at Sandler O'Neill.

Though floating-rate trust-preferred securities have been scarce, analysts say the floating-rate aspect offers benefits other than cheap regulatory capital.

"If the borrower is issuing floating-rate securities, it has the benefit of paying less if interest rates go down," said Eric Grubelich, a bank bond analyst at Keefe, Bruyette & Woods Inc.

The floating-rate bank market is only about $7 billion, while the fixed- rate market is excess of $30 billion, said the analyst.

Aside from Riggs' trust-preferred issue, analysts expect banking companies to be heavy issuers of debt in the third quarter.

"The corporate debt calendar is expected to be very heavy in the third quarter," said Van Hesser, a bank bond analyst at Goldman Sachs & Co. "Most banks expect the market to be very quiet during that time."

"Banks will probably issue debt of every kind during this period," said the analyst. "During the fourth quarter the concerns about year-2000 could make the market very volatile."

In its filing with the Securities and Exchange Commission last month, Riggs said it plans to use the proceeds to redeem debt and invest in its venture capital unit.

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