When it comes to judging the big earners in the municipal market, Nancy Utterback, vice president at Kidder, Peabody & Co., wins highest marks. Ms. Utterback is a three-time All-America team member.

This year, George Gregorio of Loews CNA Holdings Inc. gave Ms. Utterback a run for the money. He finished second by a narrow margin and outdistanced the rest of the field by a wide gap.

Ms. Utterback said: "In high yields you never know what the challenge will be in any given year. Three years ago, it was airline-related financings, while last year it was municipal bankruptcy; this year it was gas utilities."

Refunding Highlights

Specifically, refundings for industrial development revenue/pollution control revenue-bond-related transactions. She noted the $328 million Lake Charles Harbor Terminal District LA refunding bonds with Panhandle Eastern Corp. as the source of revenues supporting the bonds.

Panhandle Eastern Corp. will pay the interest and principal on the bonds, which will retire fixed-rate securities issued in 1982 and variables issued in 1986.

"PEC'S competitive position and improved earnings are positives in its credit outlook. Likewise PEC'S subsidiaries are expected to adapt effectively to changes in Federal Environmental Regulatory Commission policies," Ms. Utterback said.

Eye-catching Airport Issues

Among other recent bonds that caught her eye was a $33.9 million issue by Chicago-O'hare International Airport Special Facility for Delta Airlines. The bonds are unconditionally guaranteed by Delta. They were sold to refinance a 1982 issue and, as such, are not subject to the alternative minimum tax triggered by the 1986 Tax Reform Act.

Within the airline category, Ms. Utterback has seen the credit quality shift, with American Airlines No. I while United and Delta are tied for second place. She noted that the Port Authority of New York and New Jersey deal, backed by Continental, was rescued early this year when Delta took over the obligation to pay.

In the nonairline category, New York City weighed in as the biggest recent issuer and a perennial favorite of this analyst. The city recently priced $1.68 billion to yield 6.60. The bonds dropped to 7.05% later in the month but recovered to the 6.9% range, a level Ms. Utterback feels is comfortable.

In future months, she will watch the international economic scene as fluctuations in Europe might affect domestic rates. In addition, she cautions there may be the potential for a supply buildup in the current market.

Spreads Could Narrow

Quality spreads could narrow again. However, we are concerned that reduced demand for high-yield paper and a greater insistence by big buyers to be adequately compensated for credit risk could keep spreads at current (and more realistic) levels," she noted.

Overall, she will continue to watch the marketplace for key issues that will benefit Kidder's clients. "The name of the game continues to be to catch the market's turns, never an easy thing to do when everyone is trying to do the same thing," she said.

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