An issue of $148 million Kansas City School District, Mo., refunding leasehold revenue bonds dominated the primary sector yesterday, while secondary prices continued to drift, despite shifting economic data and heavy new issuance.

A Prudential Securities Inc. group tentatively priced and then restructured and raised some yields on the Kansas City issue, which is being backed by Financial Guaranty Insurance Co., and will carry triple-A ratings from Moody's Investors Service and Standards & Poor's Corp.

Included in the final terms are serial bonds priced to yield from 5% in 1992 to 6.60% in 2002. At the preliminary pricing the serials ranged out to 2008 with yields as high as 6.90%

The three term maturities came as a result of the eliminating of the 2003-08 serials. A 2004 term, containing $20.7 million of the loan, was priced as 6 3/4 to yield 6.80%. A 2005 term, containing $11.4 million of the loan, is priced as 6 5/8s to yield 6.85%, and a $38.9 million 2008 term maturity was priced as 6 1/2 to yield 6.90%.

Meanwhile, secondary prices barely moved after the report that initial state unemployment insurance claims rose 7,000 to a seasonally adjusted 395,000 in the week ended July 6.

In analyzing the tax-exempt yield curve and its relationship to other markets, traders say that intermediate and long term tax-exempt yields are attractive when compared to those in the shorter maturities. Demand for bonds further out on the curve is greater, holding prices in, despite the recent heavy supply and the $3 billion that had to be absorved thi week.

"Clearly, the low after-tax return on short-term instruments -- below 4% in virtully all cases -- is inducing investors to consider intermediate or long-term bonds, or packaged products such as bond funds," wrote George D. Frielander, managing director in the portfolio strategy department at Smith Barney, Harris Upham & Co., in the firm's latest newsletter. "This impetus should even accelerate as bond call dates get closer on tens of billions of high-coupon bonds currently owned."

Supply remains heavy and traders have reported the emergence of a cautions tone. After three consecutive days above the $4 billion mark, The Bond Buyer 30-day visible supply has finally dropped to $3.1 billion. But that's still $158 million higher than last Thursday.

The Blue List total of municipal bonds is currently at $1.1 billion, down $66.6 million from a week ago.

Exacerbating supply concerns, the Treasury said it will raise $12.7 billion of new cash by auctioning $12.5 billion of two-year notes next Tuesday and $9.2 billion of five-year notes on Wednesday, to replace $9 billion in maturing securities. In addition, the markets soon will have to grapple with the August refunding.

In secondary activity, traders reported moderate bid-wanted activity with prices moving in a narrow range.

In the debt futures market, the September munici[al contrast settled 91 11/32, unchanged on the day, with the MOB spread calculated at negative 63.

In dollar bond trading, New Jersey Turnpike Authority 7.20s of 2018 were quoted unchanged on the day at 103-103 1/4 to yield 6.64% to the par call in 1999. Triborough Bridge and Tunnel Authority 7s of 2020 were unchanged at 97 7/8-98 1/8 to yield 7.15%. And South Carolina Public Service Authority 7.10s of 2021 were 1/4 point higher at 99 3/4-par to yield 7.10%.

In other new-issue activity in the negotiated sector, and A.G. Edwards & Sons group priced $31 million Leon Countty, Fla., capital improvement revenue bonds.

The offering includes serials priced to yield from 4.70% in 1992 to 6.87% in 2008.

A 2013 term was priced to yield 6.85%.

The bonds ar backed by MBIA Corp. and triple-A rated by both Moody's and Standard & Poor's.

Traders reported continued weakness in another quiet session in the short-term market, with yields unchanged to five basis points higher on the day.

In secondary trading, March New York State tax and revenue anticipation notes were quoted near the end of cash at 5.45% bid, 5.40% offered, while New Jersey notes were at 5.10% bid, 5.05% offered, and Los Angeles County notes were quoted at 5.15% bid, 5.10% offered.

Prerefunded bonds were mostly unchanged. Prerefunded bonds with national names, callable in 1995, were quoted at 5.83% bid, 5.80% offered, with some offerings around a 5.78%.

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