Many buyers of New York City bonds say they have no plans to dump their holdings of city debt and believe Mayor Rudolph Giuliani will take all the steps necessary to close a fiscal 1995 gap that some monitors estimate at $800 million or more.

"People in the market have a lot more confidence in Giuliani" than is being portrayed in the media, said one fund manager who spoke on the condition of anonymity. "There's a perception that people in City Hall are doing the right thing."

Sentiments similar to this one, obtained in a series of interviews conducted by The Bond Buyer, are surprising given the recent drumbeat of negative news regarding the city's $31.6 billion budget for fiscal 1995 and the stem warnings by many of the city's financial monitors that the spending plan is falling out of balance.

Giuliani's honeymoon with buyers of municipal debt is also surprising, given the market reception afforded his predecessor, David N. Dinkins. Under the former mayor, bond yields spiked following a series of budget reports showing substantial gaps in the city's budget and other problems that eroded confidence in the mayor's ability to close the gaps.

In recent days, official monitors and those representing independent organizations have criticized the fiscal 1995 spending plan, which went into effect on July 1, as containing federal aid that would probably not materialize and relying on state actions that stood little chance of being enacted.

On Wednesday, Giuliani described in broad terms his plans to balance the budget in a luncheon speech to the Municipal Forum of New York. The mayor said he would create a structurally balanced budget through a reduction in the size of government and productivity improvements.

Giuliani's statements were not warmly greeted by some of the city's budget monitors, who felt the speech glossed over the real problems in the budget, such as increased overtime spending and lower tax revenues.

But most buyers of municipal bonds said the speech reinforced their confidence in the mayor's ability to handle the problem, and that the current price of city debt is largely representative of the budget risks. "People are very comfortable with Giuliani," said Michael Brooks, a senior municipal credit analyst with Sanford C. Bernstein & Co.

Unlike many of his colleagues, Brooks believes that the city bonds are due for a tumble when the market begins to take into account the size of the city's budget problem, or if one of the rating agencies downgrades the city's bonds. Still, Brooks admits he holds a minority opinion, at least for the moment. Buyers "believe Giuliani has got it completely under control," he said.

At the moment, Standard & Poor's Corp. rates the city A-minus with a negative outlook. Many analysts say it is just a matter of time before Standard & Poor's cuts the city's rating to BBB-plus, a level equivalent to the city's Baal rating from Moody's Investors Service. Officials at Standard & Poor's say they continue to monitor the city's budget problems, but have no immediate plans to move on the city's rating.

In recent weeks, 20-year New York City bonds have traded at about a 6.55% to 6.60% yield, while 10-year city general obligation bonds have traded to yield about 6.20%, traders say.

John B. Pinkham, a vice president and senior portfolio manager of a $4.7 billion bond fund for Franklin Resources Inc., said he believes the yield levels on city debt are basically representative of both underlying budget problems and the market's confidence m Giuliani's ability to deal with them. "Giuliani projects an aura of confidence," Pinkham said.

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