A preferred stock offering from France's Credit Lyonnais was more than tripled in size to $350 million amid strong demand from yield-hungry institutional investors.

The issue was sold in the private placement market and qualifies under Securities and Exchange Commission Rule 144-a, which permits large investors to trade the securities.

Agents Merrill Lynch & Co. and Goldman, Sachs & Co. increased the issue from $ 1 00 million and lowered the dividend to 9.50% from the originally proposed 9.75%-10%.

Good Grade, Good Yield

The Credit Lyonnais issue offered the rare combination of an investment-grade rating and a yield topping 9%.

Standard & Poor's Corp. downgraded Credit Lyonnais just prior to the offering. Senior debt was cut to A from AA minus.

Preferred stock, which had not been rated previously, was assigned a BBB grade. Moody's Investors Service rates the preferred stock Baal.

The bank paid a much higher rate than other banks for recent preferred issues.

Last month, Bank of Boston Corp. issued preferred stock in the public markets with a 77/8% dividend. The rate was lower than Credit Lyonnais' despite carrying a junk rating from Standard & Poor's.

Retail investors are the typical buyers of preferred stock in the public market. Rates for public offerings are lower than for private deals, which depend on institutional investors.

That is because there are more potential buyers of public offerings and because institutional investors are more price-sensitive than retail buyers, market sources said.

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