New York is considering converting all or some of its $3.5 billion of state-supported debt in auction-rate mode into variable rate demand bonds, according to a request for proposals for liquidity and letter of credit facilities released Friday.

The RFP was released at the end of a week marked by the failure of more than $1 billion of auctions of state-back debt issued directly by the state or through public authorities. The state is also considering placing a letter of credit on up to $1.2 billion of existing VRDBs.

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