New Jersey's improved cash flow and a one-shot revenue raiser helped the state significantly reduce yesterday's sale of tax and revenue anticipation notes.

During the sale, the state competitively issued $600 million in Trans, a short-term borrowing of six-month notes that helps the state meet its cash-flow needs. The state's 1995 fiscal year ends June 30.

Officials also plan to offer $200 million of short-term, variable-rate commercial paper in coming weeks.

Earlier in the year, the state had expected to sell about $1.3 billion in short-term notes during fiscal 1995. And recently, market observers had expected at least a $1 billion sale for the notes.

Credit rating officials attribute the reduction from these expectations to an unexpectedly high level of cash produced by an improving state economy, and a one-shot revenue raiser of $500 million, generated by changes to the state's pension and retiree health programs.

New Jersey sold $1.8 billion of Trans in fiscal 1992, $1.6 billion in 1993, and $1.3 billion in 1994, Moody's Investors Service said.

CS First Boston Corp. won $350 million of the notes at a coupon rate of 5%. A source at CS First Boston said all of the firm's notes have been sold, mostly to money market funds.

State Treasurer Brian Clymer said he was "very pleased" with the sale, which received a total of 45 bids.

"Wall Street showed strong interest in this sale," Clymer said. "We were oversubscribed by more than $5 billion, and the bids were very tight."

CS First Boston and all other bidders bought the notes at a fixed rate. Initially, the state told bond firms that they could also bid on two variablerate series of notes, but the six winning bids all came in for fixed-rate notes.

"It was more cost-effective for the state to sell the notes at a fixed rate," said the source at CS First Boston. "We liked the notes. We thought there was going to be demand, so we took some risk."

Hyman Grossman, a managing director at Standard & Poor's Corp., said New Jersey's cash-flow situation in July indicated that the state would need to go to market with a $1.3 billion Trans sale this year.

As for the size of next year's cash-flow borrowing, Grossman said, "It's far too early to tell. These things vary from year to year. We won't know until next July when the budget is adopted."

But a release from Moody's said that this year's issuance of both Trans and commercial paper "continues a trend of reduced borrowings evident since fiscal 1993."

Standard & Poor's rated the fixed-rate Trans notes SP1-plus, its highest rating. Moody's also gave the notes its highest rating, MIG1, while Fitch Investors Service gave its top rating of F1-plus.

CS First Boston won $325 million of the notes bidding an effective interest rate of 4.11%. Lehman Brothers won $100 million; Smith Barney Inc. won two separate bids for a total of $75 million.

J.P. Morgan Securities Inc. also took $75 million, and First Fidelity Securities Group won $25 million of notes.

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