With less than two weeks remaining in the New York State legislative session, New York City is uncertain it will obtain approval needed from lawmakers to sell yendenominated bonds to investors in Japan.

In the absence of state authorization, the city plans to issue the bonds through a not-for-profit corporation.

The proposed bond sale, announced last month, calls for the city to sell up to $120 million of taxable yen-denominated bonds, which equals about 30 billion yen, sometime this fall.

City finance officials hired Nikko Securities Company International Inc., a Japanese securities firm, to discuss the bond sale with Japanese finance officials.

In March, the city sold dollar-denominated bonds to Japanese investors who were attracted to the credit quality and healthy returns provided by city securities.

City finance officials say a yen-denominated issue could help the city tap the Japanese market even further and lower the city's borrowing costs.

But the city does not have state legislative authorization to issue foreign currency-denominated debt. With the legislative session scheduled to expire by the end of the month, city officials are unsure they will receive approval to complete the deal.

Under the alternative plan, the city would sell taxable bonds to a special purpose not-for-profit corporation, which would sell yen-denominated securities to the Japanese investors. The not-for-profit would then swap yen into dollars to convert the bond sale into money the city can use.

The city would pay interest to the not-for-profit every six months in dollars. The corporation would swap the dollars into yen to make the interest payments to Japanese investors.

Spokesmen for the state Senate Finance Committee and the Assembly Ways and Means Committee said the legislation is being discussed by members, who are cautiously reviewing the matter. They said they did not know if the city would obtain the Legislature's approval before the end of the session.

The Assembly received a draft bill for the legislation yesterday, but the Senate has yet to receive a draft bill. "Obviously, this is a complicated subject," said Charles Carrier, a spokesman for the Assembly. "So we're going to look at it carefully."

A spokesman for the state Senate said members have "a bunch of reservations" about the proposal. "There are fluctuations in the currency market, and that's a concern for us," said William Stevens, a spokesman for the Senate.

Mr. Stevens also said that Japanese officials have "some questions" about the city's use of the not-for-profit corporation.

But Michael W. Geffrard, director of the city's office of public finance, said, "We understand the Japanese government will have to approve any capital market transaction. And we have been led to believe that this approval will be forthcoming."

City finance officials, while preferring to issue the securities directly to Japanese investors, termed the not-for-profit plan a good alternative. They also described the not-for-profit issuance as slightly more expensive, but not enough to doom the deal.

"But this is something we wouldn't really be able to quantify until we did the deal," said one city official.

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