In a surprise move, Moody's Investors Service yesterday assigned its highest short-term rating to New York City's $700 million of revenue anticipation notes, upgrading the city to MIG-1 from MIG-2.

The city's short-term ratings now surpass the rating on New York State's tax and revenue anticipation notes, which are rated MIG-2.

Moody's also assigned a MIG-1 rating to the city's planned issuance of $700 million in tax anticipation notes, which are regarded as a stronger credit because they have the city's tax pledge. The Rans are secured with state aid payments.

The city's Ran rating is important because it represents an upgrade in the most credit-sensitive of the city's short-term securities from the level assigned by Moody's last year. The notes are issued in anticipation of state revenues. In 1991, during the state's budget crisis, Moody's rated the city's Rans MIG-2 and the Tans MIG-1.

The upgrade surprised some city finance officials, who expected a MIG-2 rating on the Rans despite improvement in the city's cash-flow status. This improvement was underscored in a recent New York State Financial Control Board report, which predicted the city would receive "the highest possible credit ratings" on the short-term securities.

The city will issue $1.4 billion of these securities on Thursday, in what finance officials are calling their first and only cash-flow borrowing for the 1993 fiscal year, which begins July 1. The notes are issued to cover expenses while the city waits to receive tax and other revenues later in fiscal 1993.

The Rans will mature on June 30, 1993, while the Tans will mature on April 14, 1993. On Friday, Standard & Poor's Corp. rated the Tans SP-1-plus and the Rans SP-1. Fitch Investors Service rates the Tans and Rans F1-plus.

City officials will issue the securities during a single sale to take advantage of the flood of new cash expected in the municipal market after July 1, when about $8 billion of municipal bonds will be redeemed. The favorable market conditions should help the city achieve a favorable interest rate on the competitive issue. The Bond Buyer general obligation note index registered a yield of 3.20% on June 17, down from 3.28% on June 10.

In assigning the credit ratings, Moody's said in press release that the city's "short-term credit position has markedly improved," thanks to the establishment of the state's Local Government Assistance Corp. and an overall improvement in the city's cash-management process.

The corporation was established by the state Legislature in 1990 to speed up aid payments to New York municipalities, like the city. In recent years, the state budget has been passed after the start of the new fiscal year, delaying revenue payments to municipalities.

Without the corporation, the delay in state aid payments added a significant level of credit concern to the Rans, which unlike Tans are issued by local governments in anticipation of state money.

Marie S. Pisecki, assistant vice president at Moody's, said the Ran upgrade was in large part the result of the success of the corporation, which provides aid to municipalities regardless of the state's ability to pass a budget.

But she said other factors contributed to the upgrade as well. Ms. Pisecki cited the reduction in the overall level of short-term securities issued for the 1993 fiscal year. The city, for example, issued $2.25 billion for cash management purposes in the 1992 fiscal year.

In addition, Ms. Pisecki said the city has developed cash-management techniques to allow it to better address delays in state aid.

"The decision was based on all the factors combined," which have reduced the city's dependency "on state payments," she said. Ms. Pisecki said the rating, however, is not an indication that New York City's long-term credit status, which is reflected in its general obligation bond grade, has improved. Moody's rates city GOs Baal, while Standard & Poor's rates the securities A-minus with a negative outlook.

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