A debt restructuring idea recently floated by New York City Mayor Rudolph Giuliani has executives at the major rating agencies worried that the administration may resort to budget gimmickry that could have dire consequences for the city's bond rating.

Facing a budget gap of as much as $1 billion in fiscal 1995, Giuliani said last week that he recently met with Felix G. Rohatyn, former chairman of the Municipal Assistance Corp., to discuss a refinancing of MAC bonds as part of a larger package to address the city's structural budget deficit. City officials plan to meet with other MAC members, including the present chairman, Eugene J. Keilin

As sketched out by officials, the restructuring would give the city a short-term infusion of cash in return for budget cuts and other measures to eliminate the billions of dollars of budget gaps that appear through the life of the city's multiyear financial plan.

For their part, city officials say they cannot provide details of the plan, "There is no concrete proposal," said budget director Abraham Lackman.

"We will continue our dialogue with MAC," Lackman added. "Any decision with MAC we would include" in the city's preliminary budget for fiscal 1996, which is released in January.

But after hearing Giuliani and Lackman's initial ideas, executives who rate city bonds are worried that the administration may use one of several debt-restructuring gimmicks considered by the administration of the previous mayor, David Dinkins.

Interviewed on Friday, severel bond raters said they were worried about what they are hearing from city hall. A downgrade could force city bondholders, many of whom say they have confidence in Giuliani, to focus on the severity of the city's budget problems and demand higher yields to purchase city debt.

"We don't feel any different than we felt two or three years ago," said Richard Larkin, a managing director at Standard & Poor's Corp., said of the budget ideas.

Standard & Poor's rates city bonds an A-minus, with a negative outlook, and has recently threatened the city with a downgrade unless the city attempts to reduce its structural deficit. "Could this count toward a lower rating?" Larkin asked. "Yes. On the surface, this is definitely negative."

Executives at Fitch Investors Service, which rates city bonds A-minus, also say a debt restructuring could have serious credit implications for the city. "Any time an issuer looks to restructure debt to bring about balance, it's a concern," said executive managing director Richard Rafael.

Brad Gewehr, vice president and supervisor of Northeast ratings at Moody's Investors Service, says he has similar concerns, but could not comment until the city provides more details. Moody's rates city GOs Baal. "To us, debt restructuring is a sign of stress," Gewehr said.

In the early 1990s, the Dinkins Administration considered several debt restructuring plans involving MAC. Under the so-called mirror-bond plan, the city would issue bonds to repurchase debt it had sold to the MAC following the financial crisis of the 1970s. The bonds are called mirror bonds because they are similar in structure and maturity to debt MAC sold at the time to purchase the city's securities.

Since that time, the city has made debt service payments to MAC. By issuing another set of bonds, the city could refund the mirror bonds with new debt, and obtain a large infusion of cash for budget balancing purposes.

Another refunding idea using MAC would involve the city's selling its own debt, and purchasing outstanding MAC bonds that are secured by city sales tax revenues. That would allow sales taxes to flow back into the city's coffers.

During the Dinkins Administration, threats of a downgrade caused the city to shelve both proposals. MAC officials said at the time that the proposals would be carried out only if the city's debt rating would not be affected.

In a telephone interview on Friday, city budget director Lackman said the restructuring would take place only as part of a larger plan to reduce city government and the city's structural deficit. In terms of fiscal 1995, Lackman said, the mayor and Rohatyn met to discuss increasing the amount of money the city receives from MAC under its severance buyout plan.

At the moment, the city is receiving $200 million from MAC to provide severance packages and reduce its workforce. Lackman said Giuliani plans a major announcement in coming weeks that will detail a permanent weekforce reduction, and possibly more severanace buyouts.

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