BOSTON -- Moody's Investors Service is reviewing Massachusetts' credit rating, and some municipal market participants say privately that the state might be upgraded by the agency within a month.

The possibility has several state officials holding their breath. An upgrade would be a big feather in the caps of Gov. William E Weld and Treasurer Joseph D. Malone, who face the voters this November.

Although several analysts at Moody's would not confirm that the agency was planning the upgrade, one source familiar with the credit said he expects the state to exert a maximum amount of pressure on the agency for an upgrade at the state's next review.

If Moody's acts, it is expected that the rating agency would raise the state's rating to A1 from A. Standard & Poor's Corp. and Fitch Investors Service

rate the state A-plus.

"We feel that we have been due an upgrade for over a year," said deputy state treasurer Kenneth Olshansky. "We talk to the agency continually, and we made a major presentation to the agencies earlier this year."

If the upgrade comes, it is expected to occur at about the same time as the state's planned bond sale in October or November. Olshansky said the state is planning to sell around $250 million of general obligation bonds through competitive bidding.

Sources at both Standard & Poor's and Fitch said the state has not been in contact with them in some time. They said they Would not be surprised if this time around state officials focus all of their energy on getting the Moody's upgrade.

Olshansky said the recent report from the state's comptroller would probably bode well for the state's rating.

Last week, Comptroller William Kilmartin released a preliminary report stating that for the fourth consecutive year, the state has achieved a positive general fund balance. Because of the positive balance, the state will be able to contribute to its stabilization, or rainy-day, fund.

Kilmartin said that Massachusetts ended fiscal 1994 with a positive fund balance of $581 million, with $59.5 million infused into the rainyday fund. With the expected payment, the state's rainy-day fund will stand at $377 million.

The state's 1994 fiscal year ended on June 30.

If the state is upgraded, it would be the most recent affirmation that the work of the Weld Administration has righted many of the state's financial woes.

Yesterday was primary day in Massachusetts. While Weld and Malone ran unopposed on the Republican side, the Democratic opponent for governor is expected to be Rep. Mark Roosevelt, D-Boston. Sen. Shannon O'Brien, D-Easthampton, ran unoppossed for the Democratic nomination for state treasurer.

When Weld took office in January 1991, the state was the lowest-rated state credit in the nation. At that time, Moody's rated the state Baa, Standard & Poor's rated it BBB, and Fitch rated it single-A.

Since then, the state has been upgraded once by Moody's and Fitch and twice by Standard & Poor's.

One statehouse source said that Moody's may have been reluctant to raise the state's ratings because of the problems that plagued the state during the administration of Gov. Michael S. Dukakis.

During Dukakis' last term, when he was running against George Bush for the presidency, the state's financial situation quickly declined. Dukakis' relationship with the legislature became adversarial and consequently little was done to tackle the state's problems.

When Weld took office, he quickly improved relations with the legislature and was rewarded with the state's first upgrade in 1992.

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