Municipals lolled through a boring session yesterday as market players waited for new deals.

The municipal market showed a muted reaction to the first leg of the Treasury auction and prices were mostly unchanged on the day.

The tax-exempt market appeared to being moving upward near the end of last week, but optimism was cut short as prices fell in tandem with the government market on Friday.

Treasuries fell ahead of significant supply as the Treasury plans to sell a total of $60.6 billion of new paper this week.

The auction began yesterday with the sale of $23.6 billion of bills and $15.5 billion of three-year notes. About $11 billion of 9 3/4-year notes will be sold today, followed by $10.25 billion of 30-year bonds Thursday.

Municipals are likely to tag along behind the government market this week, at least until the auctions are concluded, content to focus on new issues, traders said.

Market players reported increased investor demand after the presidential election last week and underwriters reported improved new issue results.

In light action in the primary sector yesterday, First Boston Corp. tentatively priced $170 million of Missouri Health Facilities refunding revenue bonds for SSM Health Care.

The offering included serial bonds priced to yield from 3% in 1993 to 6% in 2003. A 2008 term was priced as 6 1/4s to yield 6.35% and a 2016 term was priced as 6 1/4s to yield 6.45%.

The issue is insured by the Municipal Bond Investors Assurance Corp. and triple-A rated by Moody's Investors Service and Standard & Poor's Corp.

Merrill Lynch & Co. priced and repriced $125 million of Dallas-Fort Worth International Airport Facility Improvement Corp. revenue bonds for American Airlines Inc.

The reoffering yield was lowered by about eight basis points at the repricing.

The bonds were priced as 7 1/4s to yield 7.428% in 2030.

The issue is rated Baal by Moody's and BBB by Standard & Poor's.

Rauscher Pierce Refsnes Inc. priced $107 million of Pima County, Ariz., general obligation refunding bonds.

The offering included $94 million of GO refunding bonds priced to yield from 2.85% in 1993 to 5.90% in 2002, 6.40% for terms in 2008, and 6.45% for terms due 2009. There also was $12 million of flood-control bonds priced to yield from 2.85% in 1993 to 6.45% in 2009.

The issue is rated Aa by Moody's and A-plus by Standard & Poor's.

In follow-through business, Morgan Stanley & Co. freed $131 million of New York State Dormitory Authority revenue bonds from syndicate restrictions.

In late secondary trading, the 6 3/8s of 2008 were quoted at 6.65% offered, compared to the original 6.70% offering.

Secondary Markets

Traders reported a light session yesterday, although there were some bonds traded from several lists. Market sources said $5 million of Harris County, Tex., Health Facilities AMBAC 6 1/2s of 2019 traded and were later reoffered at 6.55%.

Despite the inactivity, traders noted that supply has eased, reflected by the The Blue List, which fell $82 million, to $1.07 billion yesterday.

The Bond Buyer calculated 30-day visible supply at $7.3 billion, up $118 million.

Cash prices were mostly unchanged, but the December municipal futures contract settled down 3/32 to 94.22.

In secondary dollar bond trading, prices were narrowly mixed on average, traders said.

California 6 1/4s of 2019 were quoted at 6.56% bid, 6.52% offered; New York City Water and Sewer 6 3/8s of 2022 were quoted at 96-1/8 to yield 6.68%; and Washington Public Power Supply System 6 1/2s of 2015 were quoted at 98 1/2-99 to yield 6.628%.

Puerto Rico 6s of 2014 were quoted at 94-1/4 to yield 6.52%; Denver Airport AMT 6 3/4s of 2022 were quoted at 93 7/8-94 to yield 6.532%; and Florida Board of Education 6s of 2025 were quoted at 94-1/4 to yield 6.442%.

In the short-term note market, yields were unchanged to three basis points lower in spots, traders said. In late action, notes of Los Angeles, New Jersey, and Pennsylvania were quoted at 2.88% bid, 2.80% offered.

Little Rock Upgraded

Moody's Investors Service yesterday upgraded the general obligation rating of Little Rock, Ark., one notch to Aa -- the first such move since 1968.

Little Rock, the capital of President-elect Bill Clinton's home state. has no planned debt sale of unused authorization and comes just a week after the Democrat was elected. The city has carried an A1 rating from Moody's since July, 1968.

Moody's said there was no link between the election and the upgrade.

"We were aware this question might come up," said Len Reininger, assistant vice president at the rating agency. "The rating was overdue. It had been about a year since we looked at them."

The decision affects $1.495 million of Series 1968 River Port improvement bonds and $31.09 million of Series 1988 capital improvement bonds that made up the last GO sale by the city. Those bonds are backed by property taxes and a limited GO pledge.

Another $29.2 million of sales tax-backed Series 1986 Advertising and Promotion Commission bonds were not affected by the upgrade. Those bonds are insured by FGIC and remain Aaa-rated by Moody's.

In the upgrade, analysts cited the city's strengthening finances as well as legal provisions that bolster Little Rock's limited tax pledge.

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