NEW YORK -- In the latest sign of its turnaround, Citicorp last week met with groups of bond analysts and investors for the first time in years, apparently paying the way for a large debt offering.

Bond market specialist expect the giant bank to issue $250 million to $500 million of subordinated debt as early as this week.

Citicorp executive vice president Thomas Jones met with bond analysts and investors last week in Boston and New York, touting the bank's improved credit quality and future prospects.

The meetings revealed little new information about Citicorp, according to participants. But the fact that the meetings were held reflects the bank's growing confidence. Citicorp officials had not met face to face with groups of bond analysts for years.

|They've Come a Long Way'

Mr. Jones did not comment on the bank's plans for new debt issues at the meetings, which were closed to reporters.

"In general, the meeting was very positive and well-received by the audience," said one bond analyst.

"They've come a long way in the past few years, and it was sort of safe to come out and sit down with fixed-income analysts again," said Michael O'Brien, a bond analyst with Fidelity Investments.

Citicorp faces ideal conditions for a new debt issue. It bonds have rallied strongly in the last two months. The bank's 7 1/8% 10-year subordinated notes on Friday were bid to yield 90 basis points over the 10-year U.S. Treasury note, compared with a 120-basis-point premium when they were issued, according to Kidder Peabody & Co.

$1.1 Billion Issued

So far this year, Citicorp has issued $1.1 billion in subordinated debt. Joseph Labriola, a bond analyst with Kidder Peabody, estimated Citicorp will issue another $800 million to $1 billion this year

Mr. Jones told analysts that any debt issued by Citicorp this year will replace existing debt, meaning the company is looking to cut its interest expense rather than raise additional capital.

Mr. Labriola recommends buying Citicorp bonds because the bank has the potential for big earnings improvement, will likely have credit ratings upgrades in the next few quarters, and has little risk of credit deterioration.

Profitability Rising

Mr. Jones discussed Citicorp's rising profitability in the last two years, which has stemmed from declining loan-loss provisions and expenses and growing trading earnings.

The bank's operating earnings in the first half of this year were $816 million, compared with $326 million of net income in the first half of 1992.

Citicorp's reserve coverage of cash-basis commercial loans has risen from 22% in the 1991 first quarter to 63% at the end of June, and its Tier 1 capital has risen from a weak 3.7% at the end of 1991 to 5.7% at the end of June.

Mr. Jones said the bank plans to continue building reserves. Still, Citicorp's reserve coverage is far below the 156% average for the nine money-center banks covered by First Boston Corp.

In another bright note, the company's Citibank subsidiary may be close to being categorized as "well-capitalized," a classification that would reduce its deposit insurance premiums.

The main roadblock now in an outstanding memorandum of understanding it signed with regulators, putting it under close scrutiny. A spokesman declined to say when the memorandum might be lifted.

But otherwise, the bank has met the criteria for "well-capitalized" banks. Its ratios now have climbed above the minimum requirements of 5% leverage capital, 6% Tier 1, and 10% total capital.

Mr. Jones said Citicorp's global reach in consumer banking and trading differentiates it from other U.S. banks, and will support future earnings improvement.

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