Prices slipped again yesterday as the market continued lower under supply pressure, but traders reported a smattering of retail demand for the first time in nearly two weeks.
The market moved lower for the eighth session in a row yesterday as sellers and supply pushed yields higher.
Traders estimated there was $220 million in bid-wanted lists circulating in the secondary, as sellers dominated another trading session.
But traders reported a slightly better business flow, although few were willing to argue the market had ceased its correction.
"There seemed to be a retail market developing," a trader said. "We're starting to see some flow as if people care, but it's still like pulling teeth. Everybody is still thinking it's going to move lower."
Reflecting the renewed demand, The Blue List fell $31.4 million, to $1.86 billion.
Prices were mostly unchanged during the morning session, but late erosion in the government market and nearly $1 billion of new municipal deals helped to push some bonds down, traders said.
By session's end, prices were quoted unchanged to down 1/4 to 3/8 point, depending upon the bond.
In the debt futures market, the December municipal contract settled down 8/32, to 93.01.
The December MOB spread broke a record for the second session in a row, hitting negative 308 yesterday. That compared with the previous high of the year -- negative 307 calculated Tuesday.
Bucking the trend, short-term note yields fell about 15 basis points on average, thanks to thin supply and anticipation of an influx of cash at the beginning of next month, traders said.
Several sizable new deals were priced yesterday, dominated by $241 million state revolving fund senior lien revenue bonds for the Texas Water Development Board.
A syndicate led by Kidder, Peabody & Co. priced and repriced the issue and reported a good mix of retail and institutional demand.
At the repricing, the 2009 yield was raised by five basis points, while the 2013 term yield was raised by about three basis points. A 2010 term was added, but bonds were not formally reoffered to investors.
The final reoffering included serial bonds priced to yield from 3.75% in 1994 to 6.60% in 2009. A 2013 term was priced as 6s to yield 6.65%.
The bonds are rated Aa by Moody's Investors Service and AAA by Standard & Poor's Corp.
Lehman Brothers as senior manager tentatively priced $155 million Northern California Power Agency multiple-capital facilities revenue bonds.
The offering included fixed-rated bonds priced to yield from 4.75% in 1996 to 6.60% in 2008. A 2012 term was priced as 6 1/2s to yield 6.68%.
There also was $52 million select auction variable-rate securities and $52 million residual interest bonds, which were not formally reoffered to investors.
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.
Smith Barney, Harris Upham & Co. tentatively priced $144 million Monroe County, Ga., pollution control revenue bonds for the Oglethorpe Power Corp. Scherer project.
The offering included serials priced at par to yield from 3.85% in 1994 to 6.80% in 2012.
The issue is rated A3 by Moody's and AA-minus by Standard & Poor's.
Dillon, Read & Co. priced $77 million non-callable North Hempstead, Nassau County, N.Y., general obligation refunding serial bonds.
The offering included $5 million Series A general obligation refunding serial bonds and $72 million Series B bonds, priced to yield from 2.90% in 1993 to 6.55% in 2017.
The issue is insured by the Financial Guaranty Insurance Co. and triple-A rated by Moody's, Standard & Poor's, and Fitch Investors Service.
A group led by J.P. Morgan Securities won $90 million Dallas, Denton and Collin counties, Tex., limited tax general obligation bonds with a net interest cost of 6.1619%.
The firm reported an unsold balance of about $2.1 million late in the session.
The bonds were reoffered to investors at yields ranging from 3.60% in 1994 to 6.60% in 2013.
The issue is rated Aa1 by Moody's and AAA by Standard & Poor's.
An issue of $53 million Westchester County, N.Y., unlimited tax general obligation bonds was won by Chemical Securities as sole manager with a net interest cost of 5.51%.
Chemical reported an unsold balance of $17 million near session's end.
Serial bonds were priced to yield from 2.90% in 1993 to 6.25% in 2012.
The issue is rated triple-A by Moody's, Standard & Poor's, and Fitch.
Traders reported a variety of blocks out for the bid, many in the $5 million-to-$6 million range, but much of the product did not trade, they added.
In secondary dollar bond trading, prices were unchanged to as much as 3/8 point lower, traders said.
In late action, California GO 6s of 2015 were quoted at 6.73% bid, 6.70% offered; Connecticut HFA 6 3/4s of 2023 were quoted at 98 3/4-99 1/4, to yield approximately 6.847% on the bid-side; and Washington Public Power Supply System 6 1/2s of 2015 were quoted at 96-1/4, to yield 6.775%.
New York City Water and Sewer 6 3/8s of 2022 were quoted at 93 3/8-94, to yield 6.902; Puerto Rico GO 6s of 2014 were quoted at 91 1/4-92, to yield 6.775%; and New Jersey Turnpike Authority 6 1/2s of 2016 were quoted at 99 1/8-1/2, to yield 6.572%.
In the short-term note market, Los Angeles Trans were quoted at 2.77% bid, 2.72% offered; Pennsylvania Tans were quoted at 2.80% bid, 2.70% offered; and Wisconsin notes were quoted at 2.90% bid, 2.75% offered.