The New York Local Government Assistance Corp. roared into the primary sector yesterday, drawing a myriad of investors in the most successful of three new-issue outings since its inception last year.

The issue totaled $449 million and pricing speculation put the maximum yield around 7.18% the day before the sale.

But, thanks to the strong demand, lead manager Goldman, Sachs & Co. lowered yields five to 10 basis points on the serial maturities, two to five basis points on the term bonds and five basis points on several capital appreciation bonds.

A Goldman officer said that trust departments bought the shorter end of the loan along with some retail, while insurance companies took bonds after 10 years. Retail investors queued up for the zero coupon bonds, while bond funds, including both national and New York-based companies, took down the terms bonds.

The final terms included serials priced to yield from 4.90% in 1992 to 6.80% in 2004.

A 2011 term maturity, containing $45 million of the loan, was priced as 7s to yield 7.08535%; a 2015 term containing $98 million of the loan is priced as 6.50s to yield 7.0593%, and a 2021 term, containing $169 million of the loan, is priced as 7s to yield 7.1428%.

The Cabs were priced to yield 7% in 2005, 2006, and 2007.

The issue is rated A by Moody's Investors Service and A-plus by Standard & Poor's Corp. and Fitch Investors Service.

Gedale B. Horowitz, a senior officer at Salomon Brothers Inc. and chairman of the board for the Local Government Assistance Corp., said the credit has come of age after its shaky debut in the market earlier this year.

He said investors flocked to this deal because the bonds are now seasoned, trade at a proper level, and represent fair value to the investor. He also noted that the dearth of New York paper in the secondary increased demand.

Market participants acknowledged the authority's first deal was a pricind disaster, and they called the second sale a payback.

Goldman, Sachs underwrote the authority's first issue, which totaled $909.4 million and was priced on Feb. 20, 1991 with a top yield of 7.37% in 2018. Yields were boosted four to seven basis points before the deal was reported sold.

Lehman Brothers underwrote the Authority's second issue, which totaled $558 million after it was bumped from $450 million. Priced on June 19, 1991, the maximum yield was 7.595% for $254 million term bonds of 2020.

The authority was created early in 1990 to sell up to $4.7 billion of revenue bonds, secured by a portion of the state's sales tax, to eliminate the state's annual spring note borrowing. Proceeds from the bond sales will fund certain state payments to local governments that had been financed with the annual note rollover.

In secondary market trading, activity picked up yesterday, and traders reported bonds going away to permanent investors.

Market sources said that $30 million Harris County, Texas bonds traded through a 6.90% net and then retraded through 6.85%.

In addition, market sources said that there was a $43 million bid list out from a major bond fund yesterday and a $37 million list out from the same company the previous session, most of which traded.

Traders also reported a $50 million prerefunded bond list out from a Connecticut insurance company.

The market in general still appears to be looking for an ease by the Federal Reserve. The Treasury market gave up some ground yesterday as another session passed with no action from the Fed.

"Everybody keeps saying we're going to get an ease with the next number and it doesn't happen," one trader said. "When there's little activity it takes longer to realize that what you've been waiting for isn't going to happen."

But in the debt futures market, the December municipal contract still managed to settled in positive territory, closing up 1/32 to 93.09 with the December MOB spread calculated at negative 145.

The markets will now watch for today's producer price report, initial jobless claims, and money supply reports in hopes of more clues to an ease.

A jump in energy prices will result in 0.3% gain in tomorrow's August producer price index, according to a survey of economists by The Bond Buyer.

In secondary dollar bond trading, prices were narrowly mixed with New Jersey Turnpike Authority 6.90s of 2014 quoted down 1/8 near the end of trading at 99 3/8-1/2 to raise the yield to 6.94%. New York LGAC 7s of 2016 were quoted up 1/8 to 98 3/8-5/8 to lower the yield to 7.11%. Puerto Rico Electric Power Authority 7s of 2021 were quoted down 1/8 to 99 3/8-5/8, where they returned 7.02%. And Colorado River Authority insured 6 5/8s of 2021 were quoted unchanged at 97 1/4-5/8 to yield 6.81%.

In the note sector, short-covering sent yields down nearly 10 basis points on most names.

In late secondary trading, Los Angeles Transportation Authority notes were quoted at 4.65% bid, 4.60% offered, while New Jersey Trans were quoted at 4.67% bid, 4.62% offered. March New York State Trans were quoted at 5.25% bid, 5.21% offered near the end of cash trading.

June California bonds failed to perform as well as other names as supply pressure from $1.4 billion June Pennsylvania tax anticipation notes, to be priced today, weighed on buyer's minds. June Cals were quoted at 4.72% bid, 4.67% offered in late trading.

Several note traders said they expected to see the Pennsylvania issue priced between 4.75% and 4.95%.

"It's so much to handle that it's going to have to depend on cross-over investors," one trader said. "People feel good about it, but it's a lot of wood to chop."

Negotiated Pricings

Merrill Lynch & Co. as senior manager tentatively priced and repriced $78 million Delaware GO refunding bonds to lower yields five to 10 basis points.

The final terms included serials priced to yield from 4.62% in 1992 to 6.50% in 2007.

The bonds are expected to receive an Aa rating from Moody's; Standard & Poor's confirmed its AA-plus rating.

Merrill Lynch received the verbal award yesterday afternoon.

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