Prices were quoted higher yesterday, despite more selling, as the market made gains for the first time in nearly two weeks.
Activity was moderate yesterday, but traders reported retail demand for bonds, which were readily available from a variety of bid-wanted lists totaling from $15 million to $50 million
Traders said the market seemed to be building in the consensus that prices had bottomed out after eight days of losses.
"We seem to be forming a more solid base and the bid-side firmed," a trader said late yesterday, "But nobody is sure whether we're making a real turn or if we're just pausing on our way down."
Reflecting strength yesterday in follow-through business, Lehman Brothers, senior manager for $517 million Los Angeles County Transportation Commission Proposition C sales tax revenue bonds, released the issue to trade.
In late secondary trading, the 6 3/4s of 2019 were quoted at 99-1/4 to yield approximately 6.831% on the bid-side. The bonds were originally priced to yield 6.875%.
But optimism was tempered by continued selling by funds, the upcoming presidential election, and the ever-present specter of supply, the municipal market's main worry.
The Bond Buyer calculated 30-day visible supply at a still-hefty $6.15 billion, while The Blue List of dealer inventor totaled $1.89 billion.
By season's end, prices were quoted up 1/8 to as much as 1/2 point in spots, depending on the bond.
The largest gains were made in the futures market, where short covering boosted prices, traders said. The December municipal contract settled up 14/32 to 93.15.
The MOB spread widened to negative 309 from negative 307 Wednesday, a new record for the December contract.
New deals were scare yesterday, but underwriters reported better investor demand than in previous sessions.
Dominating action, a syndicate led by Smith Barney, Harris Upham & Co. priced and repriced $175 million Chicago-O'Hare International Airport international terminal special revenue bonds.
At the repricing, yields were lowered by five basis points from 2002 through 2007.
The final offering, subject to the federal alternative minimum tax, included serials priced to yield from 5% in 1996 to 6.75% in 2007. A 2012 term was priced as 6 3/4s to yield 6.90% and a 2018 term, containing $75 million of the loan, was priced as 6 3/4s to yield 6.95%.
The bonds are insured by the Municipal Bond Investors Assurance Corp. and are triple-A rated by Moody's Investors Service and Standard & Poor's Corp.
In light competitive action, a group led by Prudential Securities Inc. won $99.5 million Port Authority of New York and New Jersey revenue consolidated bonds with a true interest cost of 6.37%.
Prudential reported all bonds sold by session's end.
The offering included serial bonds priced to yield from 3% in 1993 to 6.50% in 2012 and 6.58% in 2017.
The issue is rated A1 by Moody's and AA-minus by Fitch Investors Service.
In other follow-through business, Prudential Securities, senior manager for $86 million Nassau County, N.Y., unlimited tax general improvement bonds, reported an unsold balance of $18.7 million early in the day. The deal was priced last week.
Traders reported a steady stream of bid-wanted lists in the secondary, many from funds.
Large blocks of bonds were out for the bid, they added, including $14 million Harris County, Tex., Toll insured 6 1/2 of 2014.
In secondary dollar bond trading, prices were quoted up 1/8 to as much 1/2 point, traders said.
In late action, California GO 6 1/4s of 2019 were quoted at 6.69% bid, 6.65% offered; New York City Water and Sewer 5 3/8s of 2022 were quoted at 93 7/8-94 1/4 to yield 6.86% on the bid-side; and Washington Public Power Supply System 6 1/2s of 2015 were quoted at 96 1/2-5/8 to yield 6.80%.
Puerto Rico GO 6s of 2014 were quoted at 91 3/4-92 to yield 6.72%; Denver Airport Authority AMT 6 3/4s of 2022 were quoted at 92-1/2 to yield 7.42%; and New Jersey Turnpike Authority 6 1/2s of 2016 were quoted at 99 3/4-7/8 to yield 6.52%.
In short-term action, traders reported yields were mixed on the day.
In late trading, Los Angeles Trans were quoted at 2.77% bid, 2.72% offered; New Jersey Trans were quoted at 2.77% bid, 2.75% offered; and Pennsylvania Tans were quoted at 2.77% bid, 2.75% offered.