Underwriters reported strong demand for new issues yesterday, while secondary prices were unchanged to slightly lower.

The Treasury market was lower most of the day ahead of the Treasury's sale of $15 billion of two-year notes. But by session's end, the 30-year government bond was down only 1/8 point.

Municipal bonds were quoted down 1/8 in spots as the market simply ran out of gas, traders said.

In the debt futures market, the September municipal contract settled down 11/32 to 95.04. The September MOB spread was unchanged on the day at negative 146.

Despite the slight price drops, investor demand for new issues continued to be strong. Short-term note deals dominated new-issue action, and underwriters said investors were eager to buy bonds in anticipation of large cash inflows from July 1 bond calls.

Leading the action, California awarded $475 million of revenue anticipation warrants to two syndicates after receiving 17 bids for the deal.

Lehman Brothers won $400 million of the issue and reoffered the securities to investors at 1.45%, due July 24, 1992. First Boston won $75 million additional warrants and reoffered them to investors at 1.56%, due July 24, 1992.

Market players had expected yields to go only as low as 2.25%.

The issue is rated MIG-1 by Moody's Investors Service and F1 by Fitch Investors Service.

In negotiated short-term new issuance, PaineWebber Inc. priced and repriced $240 million of Massachusetts GO notes to lower the reoffering yield by five basis points.

The final reoffering included notes priced as 3.40s to yield 3.05%. The securities, which are noncallable, are due Jan. 28, 1993.

The issue is rated MIG-2 by Moody's SP-2 by Standard & Poor's, and F-1 by Fitch Investors Service.

In long-term competitive action, $305 million of Florida State Board of Education full faith and credit public education capital outlay refunding bonds were won by a Lehman Brothers group with a true interest cost of 6.3125%.

The firm reported "all bonds sold" by session's end.

Serial bonds were priced to yield from 3% in 1993 to 6.25% in 2010. A 2012 term was priced as 6-1/8s to yield 6.30%. A 2019 term, containing $150 million of the loan, was priced as 6.40s, but was not formally reoffered to investors for sale.

A Lehman officer said the firm owned bonds in maturities ranging from 2004 to 2019.

The issue is rated double-A by both Moody's and Standard & Poor's.

There were four bids for the bonds, and Bear, Stearns & Co. had the cover with a TIC of 6.3384%.

In the negotiated sector, a group including Lazard Freres as senior manager tentatively priced $424 million of New Jersey Highway Authority senior parkway revenue refunding bonds for the Garden State Parkway.

The offering included serial bonds tentatively priced to yield from 2.90% in 1993 to 6.20% in 2006. A 2009 term bond was priced as 6.20s to yield 6.28%; a 2013 term, containing $142 million of the loan, was priced as 6-1/4s to yield 6.40%; a 2016 term was priced as 6s to yield 6.37%; and a 2019 term was priced as 5-3/4s to yield 6.35%.

The issue is rated A1 by Moody's and AA-minus by Standard & Poor's.

A syndicate led by Merrill Lynch & Co. tentatively priced $306 million of New York State Mortgage Agency home owner mortgage revenue bonds.

The offering included $32 million of series A bonds tentatively priced at par to yield 2.70% in 2015; $32 million of series B bonds priced at par to yield 3%; $32 million of series C bonds priced at par to yield 3.05%; $68 million of series A bonds, subject to the federal alternative minimum tax, priced at par to yield 2.80% in 2024; $68 million of series B AMT bonds priced at par to yield 3.10% in 2025; and $74 million of series C AMT bonds priced at par to yield 3.15%.

The issue is rated Aa/MIG-1 by Moody's.

In follow-through business, Goldman, Sachs & Co. released $245 million of Intermountain Power Agency power supply revenue refunding bonds from syndicate restrictions.

In late secondary trading, the 6s of 2012 were quoted trading at 95-1/4-3/4 to yield 6.425%. The bonds were originally offered to investors at 6.393%.

Secondary trading was moderate, but market players reported some sizable blocks of bonds out for the bid, including $10 million of New York State Dormitory Authority 6-1/4s of 2009.

In secondary dollar bond trading, prices were quoted down 1/8 point in spots on the bid-side.

In late action, New York City Water Authority AMBAC 6.20s of 2021 were quoted at 97-1/8-3/8 to yield 6.42%, Triborough Bridge and Tunnel Authority AMBAC 6-1/4s of 2012 were quoted at 98-3/8-7/8 to yield 6.39%, and Greater Orlando Aviation Authority AMT 6-3/8s of 2021 were quoted at 98-1/2 to yield 6.53%. South Carolina PSA 6-5/8s of 2031 were quoted at 99-7/8-100-1/8 to yield 6.63%, California 6-1/4s of 2012 were quoted at 98-3/8-5/8 to yield 6.39%, and Oklahoma Turnpike Authority MBIA 6-1/4s of 2022 were quoted at 95-3/4-96-1/8 to yield 6.57%.

Negotiated Pricings

Lehman Brothers priced $87 million of Wisconsin Housing and Economic Development Authority home owner revenue bonds.

The offering included a 2025 maturity priced at par as 3-1/2s.

The issue, subject to the AMT, is rated VMIG-1/Aa by Moody's and A-1- Plus/AA by Standard & Poor's.

PaineWebber priced $65 million of Bexar County Health Facilities Development Corp. hospital revenue refunding bonds for the Southwest Texas Methodist Hospital project as a remarketing.

The offering included $44 million of series 1985 bonds priced at par to yield from 3% in 1992 to 6% in 2002. A 2010 term was priced at par to yield 6.55%, and a 2015 term was priced at par to yield 6.625%. About $21 million of series 1992 bonds were priced at par to yield from 3.50% in 1993 to 6.10% in 2003 and 6.48% in 2010. A 2018 term was not formally reoffered to investors.

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

Dean Witter Reynolds Inc. priced $64 million of Brownsville, Tex., Utilities System priority revenue bonds.

Serials were priced to yield from 3% in 1992 to 6.375% in 2008. A 2014 term was priced as 6-1/4s to yield 6.40%.

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

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