Long-term tax-exempts closed little changed in very light, dealer trading yesterday.

In the primary market, investor demand was strong enough for an underwriting account led by PaineWebber Inc. to price a $136.1 million Maine general obligation offering to shave yields five to 10 basis points.

Note traders said yesterday that they were looking forward to today's pricing by a Merrill Lynch & Co. syndicate of $3.9 billion New York State tax and revenue anticipation notes. Traders said that a preliminary pricing with a 4.95% yield was discussed at a meeting yesterday morning. A more seasoned issue of New York State December Trans was quoted late yesterday at 4.35% bid, 4.25% offered.

The final pricing of the Maine GO deal included $127.6 million tax-exempt bonds yielding from 5.25% in 1993 to 6.75% in 2005 and 2006. There were also $8.5 million taxable bonds scaled from 7.30% in 1993 to 8.95% in 2001.

The Maine issue is rated Aal by Moody's Investors Service and AA-plus by Standard & Poor's Corp.

The rating agencies also affirmed their note rates yesterday for the New York State Trans issue, with Moody's giving them a MIG-2 and Standard & Poor's an SP-1.

Although municipal secondary prices were being quoted a little higher yesterday, several traders argued that the market was basically unchanged, but firm while waiting on this week's new deals.

New York Local Government Assistance Corp. 7s, due 2016, were quoted late yesterday at 93 5/8-94 1/8, 1/8 point higher than late Friday, to yield 7.53%. A Lehman Brothers account is expected to price a new LGAC offering tomorrow. Moody's confirmed its A rating yesterday.

In other dollar bond activity, Metropolitan Seattle sewer revenue 6 7/8s of 2031 closed yesterday at 94 3/4-95 to yield 7/26%. South Carolina Public Service Authority 7.10s of 2021 were at 98 3/4-99 to yield 7.18%. And New Jersey Turnpike Authority 7.20s of 2018 were at 101 1/8-1/2, where they returned 6.94% to 1999 par call.

High-grade serial bond traders described their market as slightly firmer with bids 1/8 better in spots and the same true of the prerefunded sector. The market for bonds prerefunded into 1995 was at 5.96% bid, 5.92% offered in late trading.

Market Analysis

David Madigan, vice president and manager of municipal strategy at Merrill Lynch & Co., wrote in the firm's latest publication of Fixed Income Weekly that last week, "discount bond yields rose more quickly, tightening the discount/par bond spread to 0-five basis points from 30 basis points just two weeks ago."

The discount/par bond spread has been a "good barometer of market sentiment for the last two years," Mr. Madigan suggested. On May 30, he noted that discount bonds were trading at an average option-adjusted spread of 14 basis points to the AAA yield curve and at the same time, par bonds were trading at an average option-adjusted spread of 54 basis points.

Both sets of bonds were at roughly their average spreads for the last six months at an 8.5% volatility, Mr. Madigan noted. Since market volatility had fallen to less than 6%, the par bonds "looked very attractive," he argued.

But over the last two weeks, the par-bond average option-adjusted spread has fallen to 29 basis points, so the spread of the par bonds is now 26 basis points through the six-month average, Mr. Madigan pointed out. On the other hand, discounts have remained near their averag spread, therefore, "swaps from par bonds to discounts offer very good value," he concluded.

Rating Revisions

Standard & Poor's Corp. yesterday lowered its rating to AA from AA-plus on $479.2 million outstanding New Hampshire GO bonds and assigned the new rating to this week's sale of $38 million bonds.

In lowering the rating, Standard & Poor's said that the action "reflects a fiscal 1991 (ending June 30) operating deficit resulting in a substantial negative fund balance.

Moody's Investors Service, however, confirmed its Aal GO bond rating, but warned that "persistent economic difficulties continued to seriously affect state financial operations."

Standard & Poor's also reduced its GO bond rating for Prince Georges County, Md., lowering it to AA-minus from AA, and affecting approximately $221.5 million of outstanding debt and an upcoming issue of $64.9 million 1991 refunding bonds. The rating agency said that the downgrade "reflects a substantial projected general fund operating deficit for the current 1991 fiscal year, projected negative general fund balances through fiscal 1993, the need to issue short-term debt to meet cash flow needs over the next several months, and debt restructuring to ease debt service payments over the next two years."

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