As part of a last-minute fiscal 1992 budget agreement cobbled together Sunday evening, New York City officials said they would refund and defease $1 billion of the city's outstanding credit-enhanced general obligation bonds to reduce debt service costs by $100 million and create enhancement capacity for its new issues.

The refunding, which would take place this fiscal year, hinges on bond insurers and providers of letters of credit signing on to the program and contractually agreeing to provide -- up to an agreed-upon apacity level -- credit enhancement on new city bond issues, said Mark Page, counsel and deputy director of the city's Office of Management and Budget.

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