Munis hang tough with trepidation; bond, note breaks 1992 record.

Municipals recovered some losses with Treasuries yesterday, but prices continued to hang in a balance, waiting for a decisive signal to improve or plummet further.

Underwriters reported mostly small balances from a heavy slate of competitive deals. The report was the first improvement in the primary recently and some players took the opportunity to say the market might have reached levels cheap enough to draw buyers back.

But others noted that crossover buyers have driven the new issue market, playing the spread between cheap municipals and rich Treasuries. They argue the traditional buyers are still skirting the market.

"It's a tough call, it could go either way." a trader said. "If it gets positive anybody who is strapped with bonds now will unload them easily, but if it gets worse this market could really drop. The next day-and-a-half will be critical."

Meanwhile, total note and bond new issue volume hit $277.97 billion yesterday, breaking the record set for all of 1992 of $277.21 billion, according to figures taken from Securities Data Co.'s database.

The number of issues, however, is below last year's level - 13,789 compared with 16,384 in 1992. That makes the average size of a municipal issue for almost 10 months in 1993 $20.16 million versus $16.92 million for 1992.

Last week, the record for long-term debt was broken.

Returning to yesterday's market, Treasury traders flew into a downdraft at the open as uncertainty over the future direction of rates took its toll on prices. The 30-year bond was quoted down 13/32 to 6.02% around 9:30 a.m., eastern time, while municipal futures were down 6/32 to 104.02. Municipal tone was even heavier than the losses showed, traders said, as the market continued to suffer from oversupply and an inability to sell many bonds at anything but cheaper and cheaper prices.

The credit markets did breath a sigh of relief late in the morning when the Conference Board said consumer confidence sank in October. The private business-research organization's closely watched consumer confidence index dropped to 59% in October from a revised 63.8% in September.

The long bond made it back to positive territory and found some stability, yielding right around 6% for the remainder of the session. But municipals continued to be hounded by technical problems and the overall worry over a trend reversal. Cash prices were decidedly mixed, by session's end, traders said, quoted down 1/4 to 3/8 point on average. High-grade bond yields were said to be seven to as much as 10 basis points higher on the day.

In late secondary dollar bond trading, New York City 51/2s of 2015 were quoted at 5.78% bid, 5.75% offered; Florida Board of Education 51/8s of 2022 were quoted 967/8-971/4 to yield 5.33%: and Salt River 43/4s of 2017 were 5.30% bid, 5.28% offered.

The municipal contract struggled back to positive ground, but gave up. The December contract settled down 4/32 104.04. The MOB spread widened to negative 471 from negative 459 on Monday as governments left municipals at lower levels.

Dealer inventories continued to expand as Standard & Poor's The Blue List rose for the fifth straight day to $2.05 billion, $630 million higher than a week ago. It is now at its highest level since Sept. 30 when it reached $2.21 billion, the high for 1993.

The Blue List has averaged $1.8 billion through October compared with $1.45 billion in September and $1.52 billion in the January - September period.

Competitive Deals

Topping a busy competitive slate, a Morgan Stanley & Co. group won $391 million Los Angeles, Calif., wastewater system revenue bonds with a true interest cost of 5.35%.

Prudential Securities had the cover, bidding a TIC of 5.3644%.

Morgan Stanley reported all bonds sold. Serial bonds were reoffered to investors at yields ranging from 2.75% in 1994 to 4.75% in 2003. Bonds from 2004 through 2021 were not formally reoffered to investors.

The bonds are insured by the Financial Guaranty Insurance Co. and rated triple-A by Moody's Investors Service, Standard & Poor's Corp., and Fitch Investors Service.

Elsewhere, a Lehman Brothers group won $290 million South Carolina State Capital improvement refunding bonds with a net interest cost of 4.48017%.

J.P. Morgan Securities Inc. had the cover, bidding a NIC of 4.4961%.

Lehman reported an unsold balance of $14.5 million. Serial bonds were reoffered to investors at yields ranging from 3.05% in 1995 to 4.90% in 2008. The bonds have been rated triple-A by Moody's and Fitch, and AA-minus by Standard & Poor's.

A Goldman, Sachs & Co. group won $178 million Ohio Public Facilities Commission Mental Health Capital Facilities bonds with a NIC of 4.515%.

J.P. Morgan had the cover again, bidding a NIC of 4.5362%.

The firm reported all bonds sold and the account closed almost immediately. The issue is rated A1 by Moody's and A-plus by Standard & Poor's.

Lehman also won $100 million Montgomery County, Md., unlimited tax consolidated public improvement bonds with a TIC of 4.689%.

Prudential Securities Inc. had the cover, bidding a TIC of 4.7029%.

Lehman reported an unsold balance of $27 million. Serial bonds were reoffered to investors at yields ranging from 3.05% in 1995 to 4.80% in 2007. Bonds from 2008 through 2013 were not formally reoffered to investors. The bonds are rated triple-A by Moody's, Standard & Poor's, and Fitch.

Craigie Inc. as sole manager won $80 million Virginia Public School Authority, school financing revenue bonds with a TIC of 4.6161%.

Serial bonds were reoffered to investors at yields ranging from 3.05% in 1995 to 5% in 2010. A 2014 term was reoffered as 4.90s to yield 5.05%. The bonds are rated double-A by Moody's, Standard & Poor's, and Fitch.

A Goldman, Sachs & Co. group won $65 million Connecticut general obligation bonds with a TIC of 4.647%.

Yields ranged from 3.20% in 1995 to 5% in 2008. A 2010 term was reoffered as 5s to yield 5. 1 0%. The bonds are rated Aa by Moody's and AA-minus by Standard & Poor's.

PaineWebber Inc. tentatively priced $299 million Pittsburgh Water and Sewer Authority bonds.

The offering included $288 million revenue refunding bonds priced to yield from 3.40% in 1995 to 5.30% in 2009. A 2012 term, including $48 million, was priced as 61/2s to yield 5.27% and a 2016 term, containing $76 million, was priced as 43/4s to yield 5.35%. The remaining $11 million revenue bonds were priced as 5s to yield 5.40% in 2023.

Negotiated Deals

The bonds are insured by the Financial Guaranty Insurance Co. and rated triple-A by Moody's, Standard & Poor's, and Fitch.

Merrill Lynch & Co. tentatively priced $298 million M.O., Health and Education Facilities Authority health facilities revenue bonds for the Barnes-Jewish Inc./Christian Health Services.

Non-callable serial bonds were priced to yield from 2.70% in 1994 to 5.35% in 2013. Serial bonds in 2007 and 2008 totaling about $22 million were not formally reoffered to investors. A 2021 term, containing $87 million, was priced with a coupon of 5.25% to yield 5.50%. The offering was rated Aa by Moody's and AA-minus by Standard & Poor's.

Bear, Steams & Co. as senior manager tentatively priced $209 million Wisconsin GO refunding bonds.

The offering included $79 million Series 4 bonds priced to yield from 2.60% in 1994 to 4.80% in 2006. There were $111 million Series 5 bonds, priced to yield from 4.20% in 1999 to 4.95% in 2006. A 2010 term was priced as 5.15s to yield 5.25%.

In addition, a 2013 term was priced as 51/4s to yield 5.35%; a 2016 term was priced as 5.30s to yield 5.40%; and a 2023 term was priced as 53/8s to yield 5.45%.

Finally, there was $20 million Series 6 bonds, priced to yield from 2.70% in 1994 to 4.95% in 2006. A 2010 term was priced as 5.15s to yield 5.25%; a 2013 term was priced as 51/4s to yield 5.35%; and a 2016 term was priced as 5.30s to yield 5.40%.

The managers said they expected the issue to be rated double-A by Moody's and Standard & Poor's.

Goldman, Sachs & Co. priced and repriced $158 million collateralized pollution control revenue refunding through the Brazos River Authority and the Sabine River Authority for the Texas Utilities Electric Co. project.

At the repricing, yields were raised by five basis points for the first two sets of bonds, the Brazos Rivers and the Sabine Rivers. Yields were raised by about 27 basis points on the second set of Sabine bonds.

The final offering included $50 million Brazos bonds priced as 5.50s to yield 5.55% in 2022; $75 million Sabine bonds, priced as 5.55s to yield 5.60% in 2022; and $33 million Sabine bonds priced as 5.85s to yield 5.875% in 2022.

The Brazos bonds are insured by AMBAC, the first set of Sabine bonds are backed by FSA. The insured bonds are rated triple-A by Moody's and Standard & Poor's, while the uninsured bonds are rated Baa2 by Moody's and BBB by Standard & Poor's.

Scott & Stringfellow Inc. tentatively priced $158 million various bonds for the Southeastern Public Service Authority of Virginia, regional waste system.

The offering included 148 million senior revenue refunding bonds priced to yield from 2.75% in 1994 to 5.20% in 2009. A 2010 maturity, containing $43 million, was not formally reoffered. A 2013 term, containing $43 million, was priced as 51/8s to yield 5.30%. Bonds from 1994 through 2010 are non-callable, while bonds from 2000 through 2013 were priced as original issue discounts.

The remaining $10 million was priced as non-callable guaranteed subordinated revenue refunding bonds as original issue discounts at yields ranging from 4.35% in 2000 to 4.75% in 2004.

The issue is MBIA-insured and rated triple-a by Moody's and Standard & Poor's.

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