Fed Eases Concern Over Citicorp Issue
Federal Reserve Board chairman Arthur F. Burns told the parent company of New YorkÛªs largest bank that the companyÛªs proposed changes in its planned offering of $850 million of notes ÛÏsubstantially reducedÛªÛª the FedÛªs concern that the issue would draw funds away from the already tight housing market.</br></br>The high-interest notesÛÓ they will be sold bearing a return of 9.7 per centÛÓ could have been redeemed on Dec. 1, 1974, or at any succeeding semiannual interest payment date by the investor. The interest would be recomputed each June 1 and Dec. 1 and set one percentage point higher than the prevailing three-month Treasury bill rate.</br></br>The Fed was concerned that investors who normally would keep their money in savings accounts would buy the six-month notes because of the quick redemption and high-interest features. The issue is aimed at small investors with at least $5,000 to invest.</br></br>Citicorp chairman Walter B. Wristo n wrote Burns Thursday that after consulting with the underwriters of the largest single issue ever offered by an American corporation Citicorp was willing to postpone the first redemption date from Dec. 1, 1974, to June 1, 1975.</br></br>Yesterday, in a letter addressed to ÛÏWalterÛ and signed ÛÏArthur,Û the Fed chairman said that from the ÛÏviewpoint of the Board, you have met the basic concern that gave rise to our request for a postponement of the issue.Û