In a further sign of investor enthusiasm, the price of Citicorp's new issue of convertible preferred stock advanced last week in heavy volume.

Late Wednesday, Citicorp raised $1 billion by issuing 68 million shares of securities called Percs - preferred equity redemption cumulative stock. Because of strong demand for the securities, which offer a dividend yield of 8.25%, the issue was increased from $650 million.

Early Friday afternoon, the shares were trading at $15.25, compared to an offering price of $14.75.

Both Thursday and Friday, the Percs ranked among the most actively traded issues on the New York Stock Exchange.

Common Stock Affected

More than 10 million shares were traded Thursday, making it the second most active issue. Another 3.3 million shares had traded by 1 p.m. Friday.

The heavy volume spread to Citicorp's common stock, into which the Percs will convert after three years.

The common shares were also among the Big Board's most active issues Thursday and Friday.

About 2.9 million common shares changed hands Thursday, and 1.3 millions shares had traded by 1 p.m. Friday.

The common stock's price has been steady. The shares rose 25 cents Thursday and were unchanged, at $15, early Friday afternoon.

Dilution Worries Investors

However, since it was announced in August, the Percs issue has put pressure on Citicorp's common shares, with investors showing concern about potential dilution.

Analysts said heavy volume is not unusual after a new issue of stock hits the market. Others speculated that the heavy volume in both Percs and common stock suggested that arbitrage-related trading was taking place.

The preferred issue is subject to redemption by Citicorp at any time at an initial price of $23.93 a share, declining to $20.28 as of Oct. 1, 1995.

On Nov. 30, 1995, each share automatically converts to a single share of Citicorp common.

Separately, Duff & Phelps Credit Rating Co. assigned a BBB-minus rating to the Percs. It said the investment-grade rating reflects Citicorp's aggressive steps to rebuild capital and reduce expenses.

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