The changed environment on Wall Street exacted a toll Friday as Bank United Corp. put off a $220 million debt issue, citing weak demand in the bond market.

The $10 billion-asset Houston banking company had intended to sell $120 million of 10-year subordinated notes and $100 million of seven-year subordinated notes. Smith Barney Inc. was lead manager on the deal.

Market observers were not surprised by Bank United's postponement. March employment statistics announced by the Labor Department Friday suggested further interest rate increases are in store from the Federal Reserve.

"In a stronger market, like three weeks ago, the deal would have gone well," said a trader who declined to be identified. "Bank United is an emerging investment grade story, but clearly, lower-rated debt is going to take the brunt" in a deteriorating market.

Bank United's debt is rated "Ba3" by Moody's Investors Service Inc. and "BB-plus" by Standard & Poor's Corp, which is noninvestment-grade.

In recent weeks, the high-yield market has been under considerable pressure. Traders noted that spreads have widened by as much as 75 basis points.

The deteriorating bond environment could prompt other bank and financial companies with investment-grade and junk debt offerings to follow Bank United's lead.

"The cost of corporate credit has gone up five to 10 basis points" during the last several weeks, according to bank bond analyst Allerton G. Smith of Donaldson, Lufkin & Jenrette Inc.

"About $3 billion in subordinated debt is set to mature in 1997," he said, adding, "we don't see much pressure for banks to refund."

Joseph Labriola, director of corporate bond research at PaineWebber Inc. said: "When you introduce more supply, it only aggravates the situation, given market conditions. Obviously companies will pull or postpone their deals and wait until more advantageous times."

Bank United assistant treasurer Lynn King said the Texas company must make the offering by May 23 because of a tender offer. She said $120 million of the new debt is intended to replace $115 million of outstanding senior notes. The company is planning to downstream the rest of the proceeds to its subsidiary bank.

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