Tax-exempt prices moved higher in thin trading yesterday, and underwriters were able to lower yields on $168 million of New York State Thruway bonds.

Activity was light and only a smattering of bonds were put out for the bid, but the market continued to enjoy a firm tone, with prices rising 1/4 point on average, traders said.

"Trading today is like chasing your own shadow," a trader said. "Every time you try to buy something at yesterday's offering they bump up the price. You can't get much accomplished."

Insured bonds and some actively traded dollar bonds rose more dramatically than the rest of the market.

For example, Los Angeles Department of Water and Power 6s of 2032 were quoted at 96 1/8 to yield 6.26% late yesterday, compared to 95 1/2-96 to yield 6.30%. Chicago GO AMBAC insured 5 7/8s of 2022 were quoted 3t 94 3/8-1/2 to yield 6.29% near the close yesterday, compared to 93 1/4-94 to yield 6.38% Tuesday.

In the debt futures market, the December municipal contract settled up 8/32 to 96.26.

Treasury market gains have helped support municipals this week and market players said that a firm government market would be key for tax-exempts when the next wave of new issues hit the market. Underwriters are likely to begin to price deals sometime after Friday's employment data and the holiday are out of the way.

The Bond Buyer calculated 30-day visible supply at $5.71 billion, while The Blue List fell $83.8 million to $1.36 billion.

New-issue activity was moderate yesterday, and investor demand was strong enough for Merrill Lynch & Co. to lower yields on the New York State Thruway Authority local highway and bridge service contract bonds.

Several market participants said they were encouraged that the deal was done at an aggressive price level compared to the rest of the market.

At the repricing, yields lowered by five basis points on serial bonds from 2002 through 2007 and five basis points on the 2012 term maturity.

The final reoffering scale included serial bonds priced to yield from 4.25% in 1994 to 6.40% in 2007. A 2010 term, containing $35 million of the loan, was priced as 6s to yield 6.45% and a 2012 term maturity, containing $27 million of the loan, was priced as 6 3/8s to yield 6.45%.

The issue is rated Baa1 by Moody's and BBB by Standard & Poor's.

Merrill Lynch also priced and repriced $72 million of noncallable Vermont GO refunding bonds.

Yields were lowered by five basis points in 2007 and 2008.

Serials were priced to yield from 3% in 1993 to 6% in 2008.

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

In follow-through business, Goldman, Sachs & Co. freed $132 million of Tacoma, Wash., electric system refunding revenue bonds from syndicate restrictions.

In secondary dollar bond trading, Puerto Rico GO 6s of 2014 were quoted at 96 1/2-3/4 to yield 6.29%, Florida Board of Education 6s of 2022 were quoted at 97 1/4-3/8 to yield 6.20%, and New York City Water Authority 6s of 2017 were quoted at 94 7/8-95 1/8 to yield 6.41%.

In the short-term note sector, yields were mixed, with some rising about five basis points, while other declined by five basis points.

In late secondary trading, Los Angeles Trans were quoted at 3.12% bid, 3.10% offered, Wisconsin notes were quoted at 3.15% bid, 3.10% offered, and Texas Trans were quoted at 3.15% bid, 3.13% offered. New York City Tans were quoted at 2.95% bid, 2.90% offered, and New York State Trans were quoted at 3. 1 0% bid, 3.05% offered.

Smaller Deals

Merrill Lynch priced $68 million of Boston Water and Sewer Commission general revenue bonds.

The offering included serial bonds priced to yield from 3% in 1993 to 6.20% in 2007. A 2013 term, containing $31 million of the loan, was priced as 5 3/4s to yield 6.20%.

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

Cain Brothers, Shattuck & Co. priced $65 million of Massachusetts Health and Educational Facilities Authority revenue bonds for Metrowest Health Inc.

Serial bonds were priced to yield from 3.10% in 1993 to 6.10% in 2003. A 2012 term was priced to yield 6.52%; a 2018 term bond was priced to yield 6.57%.

The bonds are rated A by Moody's and Fitch.

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