Bid-wanted lists work their way through a thin subdued market.

Continuing to exhibit a firm tone despite thin trading volume, tax-exempt bond prices finished 1/8 to 1/4 point higher yesterday after a session of subdued activity influenced by the observance of Yom Kippur.

Some dealers quoted prices as much as 1/2 point higher on dollar bonds and high grade issues.

Despite the limited dealings, investors offered more than $200 million of bonds for sale via bid lists, boosting the total to more than $700 million of securities offered this week. Trading of the securities dominated market dealings as many of the bonds garnered market interest and traded, dealers said.

Municipals took their directional cue from the positive tone illustrated in the Treasury market. Late Thursday, the 30-year U.S. Treasury was quoted almost 1/2 point higher at 98 10/32, to yield 7.63%.

"It was active until noon, but now it's dead," one dealer said late in the session. Market participants attributed some of the lighter dealings to the Yom Kippur observance.

The 30-day visible supply totaled $2.53 billion, down $535 million from Wednesday. Standard & Poor's Blue List of bonds held in dealer inventories rose $96.2 million yesterday to $1.76 billion.

Activity was dominated by the institutional sale lists, as retail investors continue to be a market apparition, dealers said.

Institutional investors used the session to continue revamping portfolios, dealers said.

Participants spotted between eight to 12 bid lists circulating through the market offering approximately $225 million of bonds for sale, compared with the $400 million and $100 million of bid lists in the market on Tuesday and Wednesday, respectively.

A number of issues traded, dealers said. Lists ranged in size from about $5 million to $58 million.

Sellers included Franklin, Nuveen, and Merrill Lynch, dealers and analysts said.

Institutions may have been selling to gain cash for new-issue purchases, dealers speculated. Investors also may have been trying to dispose of low-coupon, discount bonds in search of more current, higher coupon securities, now that interest rates have stabilized at higher levels.

"I think they're just cleaning up funds, seeking better bonds for the current marketplace," one dealer suggested.

"When you get a firm market and good bids, you sell things you would rather not own," said Robert S. Dow, a partner with Lord Abbett & Co.

Since April, in its long-term muniicipal bond funds, Lord Abbett has been moving out of deep discount bonds into more current coupon bonds with better call protection, Dow said.

The portfolio manager pointed out that despite market volatility, long-term municipal yields haven't covered much ground since that time.

The firm has approximately $3 billion in tax-exempt assets under management.

Municipals were unaffected by the session's economic data releases of July business inventories and the Philadelphia Federal Reserve Bank's September business survey.

The December municipal futures contract closed at 89 5/32, up 17/32. The MOB spread narrowed by 4/32 to negative 371.

No sizable new municipal bond issues were priced during the session.

Ahead on the new issue calendar next week, the Metropolitan Government of Nashville and Davidson counties, Tenn., is slated to sell $150 million of multipurpose general obligation bonds, via competitive bid on Tuesday.

On Thursday, Connecticut will sell $200 million special tax obligation bonds and Illinois will sell $135 million sales tax general obligation bonds.

In ratings action Thursday, Standard & Poor's assigned a AA-minus to $62.3 million of City and County of San Francisco general obligation bonds, Series 1994 A-D. The bonds are scheduled to be sold via competitive bid on Tuesday.

In other news, Standard & Poor's said it changed the name of its municipal ratings unit to "public finance department" from "municipal finance department." The new name "is mote inclusive of what S&P's governmental ratings represent today," a rating agency official said.

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