Market accords new offerings mixed reception; tone is heavier.

Investors gave a mixed response to more than $2 billion of new deals yesterday, while secondary prices also blew hot and cold on the day.

Traders reported a slightly heavy tone as the market focused on the new deals.

Traders said that the heavy bid-wanted flow experienced Monday did not spill over into yesterday's session. They continued to report summer-like conditions with many market players out of the action.

By session's end, dollar bonds were quoted up 1/8 point in some cases, but they were as low or slightly lower in others. High-grades were unchanged on the day.

The bid for cash bonds did improve somewhat after the Treasury market rallied after a successful two-year note auction, but the municipal market never fully participated in the rally, traders said.

Debt futures prices made some gains. The September municipal contract settled at the high, up to 103.27, after posting a low of 103.12. But the MOB spread continued to widen as governments outpaced municipals. The spread slid to negative 452 from negative 438 Monday.

Most of yesterday's action revolved around new deals. Underwriters reported mixed results on the day's largest offerings.

Topping the negotiated slate, a 15-member syndicate led by PaineWebber Inc. as senior manager priced, repriced, and restructured $1.2 billion New York Power Authority general purpose bonds.

At the repricing, a 2011 serial maturity, containing $46 million, was added to the scale, but was not formally reoffered. A 2014 term replaced a 2013 term.

Meanwhile, yields were lowered by five basis points in 1996, 1997, 2001, and 2003.

A PaineWebber official said that about 70% of the deal was sold on a priority basis. Retail investors were said to dominate from 1996 through 2000. Citing the historically low yields in the rest of the marketplace, the official said that order flow was somewhat weak throughout the loan, but added that good demand from dealers was there to pick up any slack.

"Considering the size of the deal, and some of these shock yields, we're pleased with the issue," the official said.

Bonds in 2002 and 2011, which were not formally reoffered to investors, were priced as derivative products. Details were unavailable before press time. Proceeds from the deal, the largest in power authority history, will be used to refund older, higher cost bonds, according to authority chairman Richard M. Flynn.

"We've achieved the lowest true interest cost of any long-term public power offering in the nation this year," Flynn said in a release. "This sale will result in $350 million in savings for our customers through lower debt payments."

The final offering included serial bonds priced to yield from 3.45% in 1996 to 5.25% in 2010. A 2014 term, containing $157 million of the loan, was priced with a coupon of 5% to yield 5.32%. A 2018 term, containing $200 million, was priced as 5 1/4s to yield 5.40%.

The bonds are rated Aa by Moody's Investors Service and AA-minus by Standard & Poor's Corp.

Grigsby, Brandford & Co. priced and repriced $505 million lease revenue refunding bonds for the Los Angeles Convention and Exhibition Center Authority.

At the repricing, term bond yields were raised by one basis point in 2013 and by three basis points in 2018 and 2021.

The final offering included serial bonds priced to yield from 4.80% in 2003 to 5.30% in 2009. A 2013 term was priced as 5 1/8s to yield 5.414%; a 2018 term, containing $171 million, was priced as 5 3/8s to yield 5.53%. A 2021 term, containing $126 million, was priced as 5 1/8s to yield 5.48%. Bonds in 2010 and 2011 were not formally reoffered.

The bonds are insured by the Municipal Bond Investors Assurance Corp. and rated triple-A by both Moody's and Standard & Poor's.

Elsewhere yesterday, Morgan Stanley & Co. tentatively priced $136 million Maricopa County, Ariz., PC Corp. refunding bonds.

The offering included $36 million for the Public Service Co. of New Mexico, priced at par to yield 6.375% in 2023, and $100 million for the Public Service Co. of New Mexico San Juan and Four Corners project, priced at par to yield 6.40% in 2023.

The bonds are rated Ba2 by Moody's and BB-plus by Standard & Poor's.

In the competitive sector, action was light and dominated by BT Securities, which won $156 million Virginia Housing Development Authority commonwealth mortgage revenue bonds with a true interest cost of 2.986%.

The firm said late in the day it was not releasing an unsold balance.

The issue was structured as Virginia's Short-Term Extendable Maturity bonds, known as STEM bonds, which are similar to the convertible option bonds common in the housing market. The STEM bonds are puttable back to the issuer after one year. The issuer can then retire the bonds or extend the bonds for another year.

The offering included $81 million Series E bonds, sub-series E-STEM bonds, due 1994, and priced as 3.05s to yield 3%. They are subject to the federal alternative minimum tax.

Also included were $75 million Series F, sub-series F-STEM bonds. priced as 2.90s to yield 2.85% in 1994.

The issue is rated AA/VMIG-1 by Moody's.

Secondary Markets

Trading was scattered and spotty yesterday leaving players to capitalize on special situations.

The market did not experience the bid-wanted flow seen on Monday, but secondary supply continued to increase. Reflecting the rise, The Blue List of dealer inventory rose $87.9 million, to $1.72 billion, the highest level since Aug. 5 when it totaled $1.86 billion.

In secondary dollar bond trading, prices were quoted mixed on the day.

In late action, Philadelphia Water Capital Guranty 5 1/2s of 2014 were quoted at 98 1/2-7/8 to yield 5.87%; Rhode Island Convention Center MBIA 5s of 2020 were quoted at 5.58% bid, 5.57% offered; and Charlotte AMT COP AMBAC 5 1/4s of 2020 were quoted at 5.50% bid, 5.46% offered.

Michigan Building Authority AMBAC 5.30s of 2016 were quoted at 5,45%, bid, less 3/4 less 3/8; and Fulton-Dekalb Hospital MBIA 5 1/2s of 2020 were quoted at 99-lock to yield 5.57%.

In short-term note trading, yields were unchanged to five basis points higher on the day.

In late trading, California notes were quoted at 2.80% bid, 2.75% offered, and New York State notes were quoted at 2.60% bid, 2.55% offered.

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