Citicorp issued $150 million of subordinated debt Wednesday in the Euro-markets.

The foreign market offered lower-cost funds than the U.S. market, a bank official said.

The 12-years notes float at 25 basis points below the three-month London interbank offered rate, with a minimum interest rate of 5.50% and a maximum of 9%.

Rating Agencies' Verdicts

They are rated Baa2 by Moody's Investors Service and BBB-plus by Standard & Poor's Inc.

Bank bonds have traded lower across the board since the end of August, with the yield spread of such bonds over U.S. Treasury securities widening appreciably.

Market observers attributed the decline to profit-taking by money managers and heavy issuance of debt securities by banks in August.

The yield spread of Citicorp 10-year subordinated debt had widened from 85 basis points over Treasuries to 95 basis points Wednesday, said David Hendler, analyst at UBS Securities Inc.

Saving 10 Basis Points

A Citicorp official said the bank company had entered into swap agreements after the bond issue, which gave it a cost of funds, including underwriting fees, of 60 to 65 basis points over the London interbank offered rate.

This was about 10 basis points less than the expected cost of issuing fixed-rate debt in the United States and entering a swap for floating-rate payments, the official said.

"The European markets offered a district economic advantage in this transaction," said the Citicorp official "Clearly, spreads have widened out in the States."

Kidder Peobody International Ltd. was lead manager.

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