Municipals were unchanged to 1/8 point firmer in sympathy with Treasuries yesterday, but action was choppy and the tone remained indecisive.

The Treasury market was-nearly 5/8 point higher soon after the open even though the August refunding was set to begin later in the day with the auction of $15 billion of three-year notes'

The bullish sentiment in the government market gave municipal traders, who are still recovering from last week's painful price, correction, more confidence and some prices gained 1/8 point.

Government Prices , gave back those gains going into the auction, which was termed weak by many, but rebounded after the Johnson Redbook showed weak retail sales.

In the debt futures market, the September municipal contract settled up to 14/32, to 99.13, while the MOB spread remained unchanged at negative 234.

But skittishness abounded in the face of growing supply and secondary activity was muted. Cash prices hovered at the same levels for most of the trading day.

"Nobody is making any big moves right here," a trader said. "The big buyers still have the Street offsides, and they want bonds cheap."

The Bond Buyer calculated 30-day visible supply at $7.74 billion yesterday, while The Blue List totaled $1.45 billion

Yields on many deals priced yesterday were lowered, but results were mixed overall.

New issues

Leading negotiated action, a 26-member syndicate led by RRZ Public Markets Inc. of Pittsburgh tentatively priced $572 million of Pennsylvania Turnpike Commission turnpike revenue bonds.

Late in the session, the firm reported 85% to 90% of the bonds sold near session's end. In addition, Moody's Investors. Service upgraded the issue to A1 from A. Officials at RRZ Public Markets said that no decision had been made concerning a repricing.

The preliminary offering included $294 million of Series O bonds priced to yield from 2.50% in 1992 to 5.95% in 2008. A 2012 term was priced as 6s to yield 6.05% and the 2017 term, containing $85 million of the loan, was priced as 5 1%2s to, yield 6.064%. There also was $278 million of Series P bonds priced to yield from 2.65% in 1992 to 6% in 2009. A 2012 term, containing $51 million of the loan, was priced as 5 3/4s to yield 6.029% and a 2017 term was priced as 6s to yield 6.10%.

The Series O bonds are insured by the Financial Guaranty Insurance Co. and rated triple-A by Moody's Investors Service, Standard & Poor's Corp., and Fitch Investors Service. Series P bonds in 2007 are insured by the Municipal Bond Investors Assurance Corp.; and bonds due in 2008 and 2009, 2012, and 2017 are insured by the AMBAC Indemnity Corp. and are triple-A rated by Moody's and Standard & Poor's. The managers said they expected the remaining Series P bonds to be rated single-A by both Moody's and Standard & Poor's.

In light competitive action, $77 million of Durham County, N.C., unlimited tax general obligation refunding bonds were won by a group led by Wachovia Corp., with a net interest cost of 5.1939%.

The firm reported an unsold balance of $6.8 million near the end of the trading session.

Serial bonds were reoffered to investors at yields ranging from 3.25% in 1994 to 5.60% in 2010.

The bonds are rated triple-A by Moody's and Standard & Poor's.

Returning to the negotiated sector, Goldman, Sachs & Co. priced $257 million of Massachusetts Municipal Wholesale Electric Co. Power Supply System revenue bonds.

Late in the session, the firm said it had received the verbal award at the original pricing levels.

The offering included $107 million Series D and $149 million Series E bonds priced to yield from 3.25% in 1993 to 6.20% in 2006. A 2010 term was priced as 6s to yield 6.30% and a 2019 term was priced as 6 1/8s to yield 6.375%.

The bonds are rated Baal by Moody's and BBB-plus by Standard & Poor's and Fitch Investors Service.

A syndicate also led by Goldman priced and repriced $184 million of Puerto Rico Municipal Finance Agency general obligation bonds to raise some yields.

Yields were raised by five to 10 basis points on maturities from 1999 through 2008.

The final reoffering scale included serial bonds only, priced to yield from 2.90% in 1993 to 6.05% in 2008.

The issue is rated Baal by Moody's and A-minus by Standard & Poor's.

PaineWebber Inc. priced and repriced $162 million of Arizona Board of Regents, Arizona State University System revenue refunding bonds.

At the repricing, yields were lowered by five basts points from 1996 through 1998. The 2012 term bond yield was lowered by three basis points, and the yield on the 2019 yield was lowered by about four basts points.

The final reoffering included serials priced to yield from 3.50% in 1994 to 6% in 2009. A 2012 term was priced as 5 3/4s to yield 6.07% and a 2019 term, containing $43 million of the loan, was priced as 5 1/2s to yield 6.11%.

The bonds are rated Al by Moody's and AA by Standard & Poor's.

Merrill Lynch & Co. priced and repriced $157 million of Chicago, Ill., water revenue bonds.

Yields were lowered by five basts points on the 1994 and 1995 maturities. The deal included serial bonds only, priced to yield from 2.50% in 1992 to 5.70% in 2004.

The issue is insured by the AM-BAC Indemnity Corp. and triple-A rated by Moody's and Standard & Poor's.

Merrill Lynch as senior manager also priced and repriced $137 million of Delaware general obligation bonds. Series B serial yields from 1994 through 1997 were lowered by five to 10 basis points, while the 2010 serial yield was lowered by five basis points.

At the repricing, there was $64 million of Series B bonds priced to yield from 2.75% in 1993 to 5.85% in 2010. Capital appreciation bonds were priced to yield 6. 1 0% in 2011 and 2012. There also was $73 million of Series C bonds priced to yield from 2.75% in 1993 to 5.85%. in 2009.

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

Bear, Stearns & Co. priced and repriced $101 million of New Hampshire Turnpike System revenue bonds.

At the repricing, the yield on the 2013 term maturity was lowered about one basts point. The final reoffering included serials priced to yield from 3.75% in 1994 to 6% in 2007. A 2012 term was priced as 6s to yield 6.16% and a 2020 term, containing $50 million of the loan, was priced as 5 3/4s to yield 6.206%.

The bonds are rated A by Moody's, Standard & Poor's, and Fitch.

Secondary Trading

Trading was light in the secondary as traders waited for the results of new deals.

In secondary dollar bond trading, some bonds managed 1/8 point gains, but prices were unchanged overall for the second session in a row.

Late in the day, traders quoted Lower Colorado River Authority FSA 5 5/8%s of 2017 at 93 1/2-3/4 to yield 6.13%, San Antonio Electric Gas System 5 3/4s of 2011 were quoted at 96 1/4-1/2 to yield 6.08%. and Puerto Rico GO 6s of 2022 were quoted at 98 3/8-3/4 to yield 6.11%.

In the short-term note market, yields were mostly unchanged on the day, traders said.

New York City Sells GOs

Market players said yesterday they expected New York City's $1.4 billion general obligation refunding bonds to garner a top interest rate as low as 6.62% for bonds maturing in 2020.

Traders said that outstanding city bonds traded hands through a 6.65% at midsession yesterday. This is one of the lowest rates the city, which has slowly come back from months of budget turmoil, has seen on its long bonds since the 1980s. Less than two years ago, as the city slipped into its budget morass, yields soared to over 8.75%.

A syndicate led by Lehman Brothers is expected to price the issue sometime today.

Moody's rated the issue Baal, while Standard & Poor's Monday assigned an A-minus rating to the deal and also affirmed the A-minus rating on the city's $17.7 billion of outstanding GO debt, with a negative outlook.

Several market players said the deal is expected to garner strong demand from investors who are eager for the yields, which are among the highest available in the market.

"Every customer has to buy that yield," said one trader. "The deal could galvanize the market." Puerto Rico to Tap Market

Puerto Rico plans to sell approximately $588 million of public improvement refunding bonds sometime next week, according to officials at Morgan, Stanley & Co., senior manager for the deal.

Specifics about the deal were not available. but an officer at the firm said progress was under way detailing structure and the possibility of bond insurance.

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