New York City on Friday made all but official the selection of four firms to serve as senior managers for its general obligation bond syndicate and two firms for its Water Authority team, but failed to reach a conclusion on the structure of its co-managers group, city sources say.

According to city sources, the city will probably appoint Goldman, Sachs & Co.; J.P. Morgan Securities; Merrill Lynch & Co.; and Prudential Securities Inc. as senior managers on its general obligation team. Missing from the team will be three firms appointed last year: Bear, Stearns & Co.; CS First Boston; and Lehman Brothers.

Although Lehman failed to make the grade on the city's senior GO team, the firm apparently has won a senior management role on the water authority's underwriting team. Lehman, city sources say, will join PaineWebber Inc.

For the past three weeks the city has been negotiating the underwriter selections, which are made jointly by officials representing city Mayor Rudolph Giuliani and city Comptroller Alan Hevesi. Even though city officials have largely settled on the composition of the senior teams, they have yet to agree on the structure of the co-manager group.

Sources say Giuliani's finance staff and those representing Hevesi are haggling over the appointment of several woman- and minority-owned firms to senior positions in the co-management underwriter class. But city government sources say the battle does not center on particular firms and involves the structure of the co-management bracket.

Sources also say both sides are debating the inclusion of a separate underwriting bracket that will rank between the co-manager group and the senior manager category.

City officials could not be reached for comment on Friday, but sources close to the negotiations say a decision could come at any time.

Absent from the water authority's senior management team is Smith Barney Inc. As senior manager under former Mayor David N. Dinkins and former city comptroller Elizabeth Holtzman, Smith Barney played the largest role of any underwriter for the water authority.

But city officials say they took issue with how Smith Barney handled the account for the past four years. Sources with knowledge of the selection process say the city's gripe with Smith Barney concerns the relationship between former senior bankers with the firm and officials in the city's budget office.

In addition, the city also took issue with the firm's handling of an inverse floater transaction last fall during a $1 billion water authority refunding.

New York City is regarded as the municipal market's premier issuer, and competition is fierce to win appointment to the city's top underwriting categories.

While tighter spreads have made the senior manager appointments less lucrative, the city has ranked as the municipal market's largest issuer during the past two years, and will sell billions of dollars of debt in the future.

As a result, firms who win senior manager roles often rank among the top underwriters in the business, a distinction that aids them in winning underwriter roles with other municipal issuers.

For fiscal 1995, which began July 1, the city plans on issuing $2.75 billion of GOs and $1.2 billion of water authority debt.

Almost two weeks ago, The Bond Buyer reported that the city had settled on the choice of Goldman, J.P. Morgan, Merrill, and Prudential for its GO syndicate.

The Bond Buyer also reported that the city had settled on the selection of PaineWebber as a senior manager for the water authority, but had also considered Morgan Stanley for that spot.

The early resolution of the senior manager positions shocked many Wall Street executives, who have grown accustomed to battles between the mayor's office and the comptroller's staff over the selections of the most senior bankers on the city's underwriting teams.

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