Munis keep rolling as buyers dig in; LGACs repriced, more bonds added.

Strong investor demand pushed secondary and new issue prices higher yesterday, the fifth consecutive day buyers queued up for bonds.

Investors were particulary receptive to $702 million of New York State Local Government Assistance Corp. bonds.

The market opened unchanged to up 1/8 point but soon picked up momentum. Traders reported a firm tone throughout the session, although they said there were some sizable bid lists circulating in the secondary.

By session's end, prices were quoted up 1/4 to 3/8 point. High-grade bond prices were up 3/4 point through the intermediate range and up 1/2 for longer maturities.

In late secondary dollar bond trading, San Jose 5s of 2020 were quoted at 5.37% bid, 5.35% offered; Orange and Orlando FGIC 5 1/8s of 2020 were 5.37% bid, 5.35% offered; and Chicago O'Hare MBIA 5s of 2018 were quoted at 5.43% bid, 5.41% offered. Florida State Board of Education 5 1/8s of 2022 were 96 3/4-97 to yield 5.35%.

The Blue List of dealer inventory continued to decline yesterday, reflecting the better bid for bonds in the Street, falling $112 million to $1.17 billion.

In the debt futures market, the March municipal contract settled up 3/32 at 103.11. The contract made a high of 103.16 and a low of 102.29. The MOB spread narrowed again as Treasury bonds failed to keep pace with the bid in tax-exempts. The March MOB narrowed to negative 409 from negative 413.

In the short-term note sector, yields were mixed on the day. In late action, California Rans were quoted at 2.05% bid, 2% offered. New York City Tans were quoted 2.05% bid, 2% offered; and Pennsylvania Tans were 2.05% bid, 2% offered.

New Deals

Buyers took bonds down from new deals aggressively enough for dealers to raise prices on most of them and handily in some cases.

In high-grade competitive action, Merrill Lynch & Co. won $288 million Maryland Department of Transportation consolidated transportation refunding revenue bonds with a true interest cost of 4.425%.

C.S. First Boston had the cover, bidding a TIC of 4.4951%.

Merrill reported all bonds sold near the end of the day.

Serial bonds were reoffered to investors at yields ranging from 2.25% in 1994 to 4.60% in 2005.

Players said the bonds were priced approximately 30 basis points through yesterday's generic double-A scale in five years, 25 through the scale in 10 years, and 25 basis points through in the 2005 maturity. The bonds were priced five basis points through yesterday's triple-A scale throughout the maturity range.

The Maryland DOTs are rated double-A by Moody's Investors Service, Standard & Poor's Corp., and Fitch Investors Service.

In the negotiated sector, a 17-member syndicate led by Bear, Steams & Co. priced, repriced, and restructured $702 million New York State Local Government Assistance Corp. new money and refunding bonds.

At the repricing, the amount was boosted from $601 million, while new money yields were lowered by 10 basis points from 1995 through 2000. Remaining serial bond yields were cut by five basis points and term bonds were lowered by three basis points. Refunding bond yields were lowered by five basis points from 2001 through 2009.

The refunding portion netted the issuer a present value savings of $27 million, according to the underwriter.

"It's been a nice market for everybody," the underwriter added. "Two weeks ago we had a bearish tone and when govies rallied on lower oil prices buyers realized that we were moving through supply really well in December and that January supply looks light and rates weren't going to 7%."

This is the third refunding to be conducted by the corporation, which was created in 1990 to eliminate the state's annual short-term borrowings. About $335 million of yesterday's issue will be used as new money to finance the acceleration of school aid payment from the state. New York State Comptroller H. Carl McCall said in a press release that improvement in the municipal market allowed "LGAC to issue its bonds at the lowest interest cost in the corporation's history." The final reoffering included Series 1993D new money bonds priced to yield from 3.20% in 1995 to 5.30% in 2009. A 2014 term, containing $62 million of the loan, was priced with a coupon of 5.375% for a return 5.47%, a 2023 term, containing $160 million, was priced as 5s to yield 5.45%. The remaining $263 million noncallable Series 1993E refunding bonds were priced to yield from 4.40% in 2000 to 5.25% in 2009. A 2014 term, containing $142 million, was priced as 6s to yield 5.35%; a 2016 term, containing $105 million. was priced as 51/4s to yield 5.38%; and a 2021 term, containing $96 minion, was priced as 5s to yield 5.38%.

The issue is rated single-A by Moody's Investors Service and Standard & Poor's Corp., and A-plus by Fitch Investors Service.

Bear, Stearns & Co. priced and re-priced $102 million Michigan Municipal Bond Authority state revolving fund revenue bonds.

At the repricing, serial bond yields were lowered by five to 10 basis points, while term bond yields were cut by five basis points.

The final reoffering included serial bonds priced to yield from 3.10% in 1995 to 5.30% in 2011. A 2014 term, containing $19 million, was priced at par to yield 5.40%.

The bonds are rated double-A by Moody's and Standard & Poor's.

Pryor, McClendon, Counts & Co. tentatively priced $160 million Missouri School District Building Corp., insured leasehold revenue bonds.

There were $61 million capital improvements project serial bonds priced to yield from 3.30% in 1995 to 5.25% in 2008. A 2014 term was priced as 5s to yield 5.40%. There also was $99 million elementary school project bonds priced to yield from 3.55% in 1996 to 5.25% in 2008. A 2014 term, containing $42 million, was priced as 5s to yield 5.40%.

The bonds are insured by FGIC and rated triple-A by Moody's and Standard & Poor's.

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