New issuance ebbed yesterday with municipal prices drifting listlessly in the summer doldrums, despite a record Treasury seven-year note sale.

The market had little news to move on but prices were capped earlier in the session as traders worried about the auction results. But quoted bonds ended mixed on the day, with a slightly upward bias when the auction went off without a hitch.

The Treasury set an 8 1/4% coupon on $9 billion of seven-year notes it auctioned at an average 8.26% yield.

The auction totaled $500 million more than offered last quarter, a record sale.

The September municipal futures contract settled up 6/32, to 91.02 with the September MOB spread calculated at negative 55.

In light new-issue activity in the competitive sector, $100 million Maryland general obligation state and local facilities full faith and credit bonds were won by a Merrill Lynch & Co. group with a Canadian interest cost of 6.373784%.

The offering included serial bonds priced to yield from 5.20% in 1994 to 6.60% in 2006.

Merrill reported an unsold balance of $36 million late in the session.

The bonds are rated triple-A by Moody's Investors Service, Standard & Poor's Corp. and Fitch Investors Service.

Smith Barney, Harris Upham & Co. won $50 million Pennsylvania Infrastructure Investment Authority revenue bonds with a true interest cost of 4.3208%.

In light negotiated new-issue activity, a group led by Manufacturers Hanover tentatively priced $43 million Utah State Board of Regents student loan revenue bonds, subject to the federal alternative minimum tax.

The offering included serials tentatively priced to yield from 6.20% in 1995 to 7.20% in 2003.

A 2005 term is tentatively priced to yield 7.40%, and a 2008 term is tentatively priced to yield 7.50%.

The issue is insured by AMBAC Indemnity Corp. and triple-A rated by both Moody's and Standard & Poor's.

Secondary trading was light with only scattered bid-wanted lists as the market waits for direction.

Today's initial claims data or Friday's producer price index may offer some impetus for action.

"Barring an increase in supply, it's hard to get a move one way or the other in the summer doldrums," one New York trader said. "We don't have a lot of bonds, and that's still helping us to outperform the Treasury sector, but it's been pretty quiet."

The 30-day visible supply has climbed back over the $3 billion mark, with preliminary figures totaling $3.09 billion. That is down $194 million from Tuesday, but up $1.34 billion from one week ago.

From June 26 to July 3, the 30-day visible was below $2 billion before exploding July 5 to $2.9 billion.

The 30-day visible has been no lower than $2.5 billion since April 19, making for the busiest first half new-issue volume ever, ringing in at $74.07 billion. That is up 21% from the first half 1990's $61.44 billion. The pace is on course for an annual volume of $148.14 billion, a 16% increase over last year, which would be the highest since 1986's $151.44 billion.

But, Standard & Poor's Corp.'s The Blue List is considerably lower, totaling $1.12 billion yesterday, down $19 million from Tuesday and down $116 million from a week ago. The Blue List has not reached $1.5 billion since June 27, after running a considerable streak at or above that mark.

The Bond Buyer placement ratio -- the percentage of the dollar volume of the week's new competitive issues placed with permanent investors -- has been hovering consistently below 85% recently.

The high occurred May 10 when 97% of eight new competitive issues, valued at $625 million, went away. However, since the week of Feb. 15, the placement ratio has failed to reach 85%.

Meanwhile, in secondary dollar bond trading, Florida State Board of Education 7 1/4 of 2023 were quoted up 1/4 point to 102 1/4 on the day to yield 6.98% to the 2004 par call.

New Jersey Turnpike Authority bonds lost some ground and were down 1/4 to 102 5/8-lock to yield 7.03% to the par call in 1999. The bonds still hold almost a one point lead on other names because of the announced refunding of all Turnpike Authority debt. Triborough Bridge and Tunnel Authority 7s of 2020 were up 1/8 to 97 7/8-98 to lower the yield to 7.16%, while South Carolina Public Service Authority 7.10s of 2021 were up 1/4 to 99 1/4-3/8 to yield 7.15%.

Short-term note yields rose five to 10 basis points on the day, traders said.

March New York State tax and revenue anticipation notes were quoted at 5.38% bid, 5.30% offered near the end of cash trading, while Los Angeles County, Calif., notes were quoted at 4.88% bid, 4.80% offered. New Jersey notes were quoted at 4.80% bid, 4.75% offered and Wisconsin notes were quoted at 4.80% bid, 4.75% offered.

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