Chemical Banking Corp. issued $312.5 million in preferred stock Wednesday, raising Tier 1 capital and setting the stage for the bank to cut its dividend costs.

The offering, which was increased by 25% over the originally planned $250 million because of strong investor demand, will raise Chemical's Tier 1 capital ratio by about 24 basis points to 6.84% of risk-adjusted assets.

But the sale may also be part of an emerging trend in which banks redeem securities issued when interest rates were higher and investors were cooler toward banks.

In a filing with the Securities and Exchange Commission, Chemical said proceeds from the sale of the 8 3/8% preferred issue may be used to redeem outstanding issues of higher-dividend preferred stock.

Other Deals Held Likely

"It would make sense for Chemical to get rid of some of their adjustable-rate preferred," a capital-markets source said. "I'm sure there are others out there who are thinking along these lines."

Last week, Citicorp offered to exchange common stock for two outstanding preferred issues. Since Citicorp does not pay any dividend on its common stock, the move could trim as much as $33 million from its annual dividends costs.

And sources speculated that Chase Manhattan Corp. is also a candidate for redeeming preferred. The bank's $250 million of series E floating-rate preferred stock, with a current dividend of 8.9%, is redeemable at its $50 par value on June 1. A Chase spokesman had no comment.

Active in Raising Capital

Banks have been active issuers of preferred stock in recent years, tapping the market to raise Tier 1 capital. About $1.3 billion in preferred was issued in the first quarter, according to Securities Data Co. But rising long-term interest rates had kept banks out of the market this quarter.

Preferred stock generally carries higher dividends than common stock.

Chemical pays an 8.9% dividend on $191.5 million of series A adjustable-rate preferred stock. The rate is 52.5 basis points higher than the dividend on the preferred stock Chemical sold Wednesday.

In addition, the dividend rate for Chemical's adjustable issue floats at 50 basis points above certain short-term and long-term Treasury security benchmarks and cannot go below 7.5%, capital markets sources said.

Sale Is Called Successful

On Wednesday, Chemical sold 12.5 million shares of $25 fixed-rate perpetual preferred stock through a group of under-writers led by Merill Lynch & Co.

"This went extremely well. We couldn't get enough stock to sell," said one official in the underwriting group.

Co-managers were Goldman, Sachs & Co.; Kidder, Peabody & Co.; Lehman Brothers Inc.; PaineWebber Inc.; Smith Barney, Harris Upham & Co. Inc.; and Dean Witter Reynolds Inc.

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