NEW YORK - Citicorp's planned offering of preferred equity redemption cumulative stock, or Percs, has cleared the Securities and Exchange Commission, a Wall Street source said Friday.

It will not be effective until a price is set. The price talk began Friday, the source said.

Citicorp can issue 42 million shares and a 15% overallotment. Being discussed is a 7.75% to 8.25% dividend yield, the source said. The road show to sell the issue will run from Tuesday until Oct. 13.

Citicorp raised the number of Percs shares that will be issued from the 32.5 million it originally planned, a move reflecting a lower current share price, an analyst said. The company plans to raise $650 million from the issue.

Mortgage Problems a Factor

One source said that although problems in Citicorp's mortgage unit were "old news," they delayed the SEC's clearing of the securities issue as regulators made sure Citicorp has its woes in hand.

Many analysts believe Citicorp is beginning a turn-around. It has been hurt by souring real estate loans and a global recession, and is aiming to build its Tier 1 capital ratio to 5% by the end of 1993.

The Percs issue is part of this effort, but constitutes "a very small fraction of the total amount Citicorp has to raise over the next couple of years," one analyst said. "We feel it needs another $4 to 5 billion in addition to the Percs."

Most analysts expect an additional stock issue before yearend. Analysts have estimated the offering will lift Citicorp's Tier 1 ratio by about 30 basis points to 4.6%.

Called |Mildly Dilutive'

One analyst sees the Percs issue as "mildly dilutive." He said the 7.75% to 8.25% dividend range is what the market expected, but that the 35% to 40% price cap will probably have to be readjusted downward to 30%. The cap is the rate at which conversion to common shares can occur. The higher it is, the better for Citicorp.

Citicorp's Percs is the first use of this instrument by a bank. Morgan Stanley and Co. is the lead underwriter.

Citicorp's common stock currently pays no dividend, so the Percs issue is a way an investor can get a yield and participate in any movement in Citicorp's stock.

One analyst said that once the Percs issue is actually priced, he will probably lower his earnings estimates for Citicorp by "less than 10%."

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