Municipals marked time in quiet trading yesterday as Goldman, Sachs & Co. won the day's two biggest competitive deals.

The largest deal was $251 million Georgia general obligation bonds, which Goldman captured with a net interest cost of 5.5358%.

The noncallable serial bonds were reoffered at a top yield of 5.95% in 2014.

Michael S.

Davern, a vice president and portfolio manager of the just under $130 million Flagship Double Tax Exempt Georgia Fund passed on the --offering.

"We felt it was a little fully priced, a little rich," Davern said.

An underwriting source familiar with the offering acknowledged that it was priced aggressively.

"Georgia came on the aggressive side, but we put a lot of bonds away," the source said, adding that the deal was particularly successful in the 2005 to 2011 range.

"Georgia always comes aggressive," the source said. About $95 million of the $251 million total remained unsold late yesterday, the source said.

Flagship's Davern said he would not ordinarily be looking for natural triple-A general obligation paper, but the recent back up in yields afforded an opportunity to upgrade his portfolio without surrendering too much yield.

While in a rally, buyers tend to hold on to the higher yielding paper they purchased earlier. Because comparable securities offer less yield, rate backups such as this one make good opportunities to rework portfolios, he said.

In this case, however, the swap did not work for his portfolio, Davern said.

While sales of the fund's shares have slowed in recent weeks, money continues to come, he said.

"We've had steady cash flow all the way through the backup," Davern said.

Frank Thach, an investment officer with the Georgia State Financing and Investment Commission, said the offering went well, and attracted three other bids in addition to Goldman's.

CS First Boston had the cover bid with an NIC of 5.5621%, followed by Morgan Stanley & Co. with 5.56513%, and Chemical Securities with 5.6554%, Thach said.

Yesterday, Goldman also won $140 million Dade County, Fla., aviation facilities revenue bonds, bidding a true interest cost of 6.2414%. The MBIA-insured bonds, which are subject to the alternative minimum tax, were reoffered at a top yield of 6.33% in 2024. Roughly $20 million of the offering remained unsold late yesterday.

Topping today's competitive calender are $136 million Nassau County, N.Y. general obligation bonds. Today's negotiated calendar is expected to feature $250 million Portland, Ore., sewer system revenue bonds through Smith Barney Inc.

Turning to yesterday's secondary market, both dollar bonds and high-grade issues were unchanged in light activity.

"The secondary market's nonexistent today," one trader said."I would say we are pretty flat on the day, it's just a matter of nothing's going on."

In debt futures, the September municipal contract settled up more than 1/8 point at 90 27/32s. Yesterday's September MOB spread was negative 391, compared to negative 384 on Friday.

"The story of this week is probably going to be the reception of the two year notes and the five-year [notes]," said James Kochan, head of fixed income asset management at Robert W. Baird & Co.

The Treasury Department is slated to sell $17.25 billion in two-year notes today and $11 billion in five-year notes tomorrow.

"If we get good participation in the auction, we could do better," Kochan said.

Overall, however, Kochan sees a "very inactive" week ahead, with municipals continuing to trade in a narrow range prior to next week's July employment report.

"There isn't a lot of eye-catching economic data until next week," he said. "People are on vacation, and there isn't much going on in bondland in general."

In rating actions yesterday, Moody's Investors Service raised the rating on Glendale, Ariz., to Aa from AI. The move covers the $71.9 million of the city's general obligation bonds that are outstanding.

Moody's also confirmed its A1 rating on Glendale's street and highway user revenue bonds. The city plans to sell today via competitive bidding $4.59 million of additional street and highway user revenue bonds.

The Glendale upgrade was attributed to sales tax revenue growth, a rebound in property value assessed valuation, and city unemployment below state and national rates, Moody's said.

Another positive factor cited by Moody's was Glendale's ability to decrease its debt burden since 1991. "The city's slower schedule for additional borrowing, and a rapid repayment of outstanding debt, is expected to yield further declines in debt burden," Moody's said.

Elsewhere, Standard & Poor's Blue List for yesterday was down $8 million to $1.69 billion. The 30-day visible supply of municipal bonds for today totals $3.79 billion, up $100.5 million from yesterday. That comprises $2.06 billion of competitive bonds, up $96.9 million from yesterday, and $1.73 billion of negotiated bonds, up $3.6 million.

Brad Altman contributed to this article.

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