CHICAGO - Detroit is scheduled to price approximately $107 million of deficit funding bonds tomorrow, a move that would complete the first step of the city's plan to eliminate a two-year $248 million budget deficit.

A second step that would restructure $122 million of limited tax debt into unlimited tax debt will go before city voters in today's election. The restructuring would save the city $12.6 million a year in its general fund.

Both steps are key components of Detroit's $2.12 billion budget plan for fiscal 1993, which also contains provisions aimed at restoring financial balance. Those measures, which have yet to be completely implemented, include job and service cuts, union wage concessions, a debt refunding, and a reduction in the city's contribution to its pension funds.

Concerns over the city's ability to balance its budget on an ongoing basis led to a rating downgrade by Moody's Investors Service on July 16 to Ba 1 from Baa for $272 million of the city's outstanding unlimited tax general obligation debt.

Standard & Poor's Corp., which affirmed a BBB rating for the city's GO debt in June, continued to assign a negative outlook to the rating, citing uncertainty over the city's ability to enact the major provisions of its budget plan.

The five-year deficit bonds will be backed by the city's share of distributable state aid and will be secured by the city's limited tax general obligation pledge of its existing revenues.

The bonds earned a higher rating from the agencies than the city's GO rating. Standard & Poor's rated the issue BBB-plus, saying the state aid revenues, consisting of state sales, income, and other taxes, are less volatile than the city's revenues. Moody's assigned a Baa rating to the bonds, pointing to the existence of "sufficient" revenue pledged to pay off the bonds and the fact the deal is structured to include a debt service reserve fund equal to six months of interest.

The state aid will flow through an intercept mechanism that diverts the city's share of the funds directly to the bond trustee until the total annual debt service on the bonds is fully funded.

The use of the state aid to back the bonds was approved yesterday by the Michigan treasurer's office, according to Nick Khouri, the state's chief deputy treasurer. The Michigan Administrative Board gave general approval to the issuance of the bonds in June.

The noncallable deficit bonds will be priced by Merrill Lynch & Co., senior manager on the deal, and co-managers Goldman Sachs & Co., M.R. Beal & Co., PaineWebber Inc., and Luther, Smith & Small Inc.

Detroit is also contemplating an interest rate swap from a fixed rate to a variable rate for the deal with Merrill Lynch as the counterparty, according to J. Edward Hannan, Detroit assistant bond accountant.

The state treasurer, who under law must approve any municipal swap, is still discussing provisions of the swap agreement with Detroit, Mr. Khouri said yesterday.

The bond restructuring on the ballot involves limited tax bonds, backed by Detroit's share of distributable state aid, that the city sold in 1989 to acquire and clean up land for a new Chrysler Corp. automotive plant. Voters will be asked to increase the city's property tax millage and use that money instead of state aid funds to pay debt service on the bonds.

Mr. Hannan said that if the bonds are approved by voters, the city has no plans to remarket them under its unlimited tax pledge. Instead, he explained, the city would substitute the newly approved property tax revenues for the $12.6 million of state aid money needed to pay debt service on the $122 million of outstanding bonds each year.

"Bondholders will not see any difference," he said.

In addition to the restructuring, Detroit voters will also be asked today to approve $135 million of new unlimited tax GO bond authorization for a number of capital projects, including public lighting, recreation and zoo facilities, and public health facilities.

J. Chester Johnson, president of Government Finance Associates, the city's financial adviser, called the ballot proposals "critical infrastructure enhancements" for the city.

Mr. Johnson said he did not believe the split rating between the two agencies would stop Detroit from gaining access to the market if voters approve the new debt authorization. He added that the market has already built in a cost factor "based on the visibility of the city's budgetary problems."

Meanwhile, Detroit is still stinging from the loss of its investment-grade rating from Moody's.

Following the downgrade, Mayor Coleman Young of Detroit charged that the agency used "substantially different" criteria to rate his city than the agency used to rate "any other large American city," and that Moody's had established a new set of goals for Detroit. Moody's officials have denied the charge, saying that no change in criteria or goals was made for the agency's rating decision.

Mr. Johnson said that once Detroit gets some of the provisions of its budget plan accomplished, city officials want to meet with Moody's.

"We hope at that meeting to define in a little less general way what criteria Moody's will utilize for the reestablishment of the city's investment-grade rating," he stated.

Daniel Heimowitz, an executive vice president and director of public finance at Moody's, said yesterday that the agency plans to meet with Detroit officials "at their convenience" to talk about "what we are looking at in the future" and what the city "may be able to do over time" to address the agency's concerns.

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