CORRECTED-UPDATE 2-New York's MTA has no plan for extra borrowing

(Changes deals total to $870 million in paragraph 9)

* MTA debt deals to go ahead next week

* Bond payments on schedule

* No shifts planned in capital projects

Nov 1 (Reuters) - New York's Metropolitan Transporation Authority on Thursday quelled some market concerns that its already strapped finances could be further strained by cleanup costs after the massive storm Sandy flooded streets and subways.

The chief financial officer of the largest U.S. mass transit system said that he does not expect to borrow extra money and the finance director added that debt issuance will proceed as planned.

``At this stage, I am not anticipating the need for external borrowing,'' CFO Robert Foran said in a conference call with reporters. ``We fully expect the operating and capital costs will be fully reimbursed by FEMA and our insurance.''

The Federal Emergency Management Agency confirmed earlier on Thursday that federal funds will cover all emergency public transportation costs through Nov. 9 in New York.

But some traders in the $3.7 trillion municipal bond market think the MTA may have to raise fares and endure a decline in credit ratings that would translate into higher borrowing costs.

``You have to think (the Sandy fixes) will significantly raise its debt burden and push them lower in the investment grade category,'' said Jim Colby, senior municipal strategist at Van Eck Global.

Some concerns were also expressed by the New York State Comptroller Thomas DiNapoli on Wednesday. He said that over a longer period, the MTA may have to shift some capital projects because of the repairs.

The MTA, which operates New York City's subway and buses, as well as trains to suburbs and various bridges and tunnels, was still calculating the costs from this week's flooding and fierce winds and has no estimates of the financial fallout.

A leading issuer in America's municipal bond market, the MTA was pushing ahead with $870 million in debt sales next week, including an offering o f $2 60 million of floating-rate notes delayed from this week because trading was interrupted by Sandy.

``We are anticipating good investor interest next week,'' said Pat McCoy, the MTA's director of finance.

Moody's confirmed an A2 rating on the revenue bonds, with a stable outlook. In a report on the storm impact on municipal issuers, the rating agency said that public transportation systems could be particularly challenged because they suffer a double whammy from lost revenue while inoperable and from the additional costs of the cleanup.

Institutional investors said next week's bond sales should go smoothly, with lots of bidders for the MTA bonds.

``The muni market is flush with cash,'' said Dan Heckman, senior vice president at U.S. Bank wealth management. ``I think demand will be strong. I may be wrong but there may even be a sympathy bid.''

McCoy added that the MTA would have ``no problem'' in meeting bond payments due on Nov. 1 and Nov. 15 on some of its nearly $32 billion of outstanding bonds.

Foran said he expected no changes because of Sandy in the MTA's capital improvements projects, which are expected to cost $24 billion over five years ending in 2014.

(Reporting by Michael Connor in Miami; Editing by Jackie Frank, Leslie Adler and Bob Burgdorfer)