Investors again snapped up new-issues yesterday, despite lower interest rates, while secondary prices moved in a tight range in light trading.

Activity was concentrated in the primary sector, and competitive deals dominated activity.

An issue of $150 million of Los Angeles Department of Water and Power, Calif., electric plant revenue bonds was won by a Dillon Read & Co. group with a true interest cost of 6.684278%.

The offering included serial maturities prices to yield from 5.60% in 1997 to 6.65% in 2014.

A 2031 term, containing $87 million of the loan, is price as 6 1/2s to yield approximately 6.73%.

The firm reported an unsold balance of $5 million late in the session, with casualty company interest in the 12- to 20-year range, while bond funds took the longer maturities. The remaining balance was concentrated in 1996 to 1998.

The issue is rated Aa by Moody's Investors Service and AA by Standard & Poor's Corp.

A Merrill Lynch & Co. group had the cover bid with a TIC of 6.6858%.

In other action, Prudential Securities won $115 million Ohio State, Higher Education Capital Facilities revenue bonds with a net interest cost of 6.056018%.

Prudential reported an unsold balance of $41.3 million late in the session.

The offering included serial bonds priced to yield from 4.90% in 1993 to 6.50% in 2006.

The 1993-2003 and 2006 maturities are insured by AMBAC Indemnity Corp. and triple-A rated by both Moody's and Standard & Poor's, while the remaining bonds are rated A by Moody's and A-plus by Standard & Poor's.

A Merrill Lynch group won $105.6 million Wisconsin transportation revenue bonds with a TIC of 6.483622%.

The issue was priced to yield from 4.60% in 1992 to 6.70% in 2011.

Merrill reported an unsold balance of $9 million late in the session. The issue is rated A1 by Moody's.

In secondary-market activity, traders reported a weaker tone soon after the open. The market reversed itself later in the session, and prices ended narrowly mixed as new issues buoyed the market.

In the debt futures market, the December municipal contract had falled as much as 7/32 on the day, but settled up 7/32 to 94.00. The December MOB spread was calculated at negative 156.

"The downside is fairly limited," said one New York-based trader. "There's a lot of cash in municipals. Most of the Fed's case is already built into the market, but if the market goes too long without some more good news it will start selling off."

Today's report on housing starts will show new starts slipped 0.9% in August to an annual rate of 1.06 million units, according to 16 economists surveyed by The Bond Buyer.

In the short-term note sector, yields rose about five basis points on the day.

In late secondary trading, Los Angeles notes were quoted at 4.70% bid, 4.65% offered, while New Jersey Trans were quoted at 4.68% bid, 4.65% offered. June California notes were quoted at 4.65% bid, 4.55% offered, while March New York State Trans were quoted at 5.20% bid, 5.15% offered.

In the new-issue note sector, New York City officials said they are still mulling when and how to sell $1.25 billion of revenue anticipation notes.

The city is slated to sell the notes in late September or early October, said Roger Anderson, interim bureau chief for debt management in the city comptroller's office. The notes may be sold through negotiation. The exact size of the deal will be determined when city officials review their cash flows needs.

A $1 billion refunding bond issue may also be sold through negotiation in late October or early November, Mr. Anderson said. The proceeds from the sale would defease about $1 billion of outstanding insured city GO bonds, and free up insurance capacity to reduce the city's borrowing costs on new issues.

Negotiated pricings

An issue of $93 million Massachusetts Health and Educational Facilities Authority revenue bonds for the Saint Elizabeth's Hospital of Boston was priced and repriced by a PaineWebber group to lower some yields five to 10 basis points.

The final terms included serials priced to yield from 4.60% in 1992 to 6.70% in 2005.

The issue is FSA-insured and rated triple-A by both Moody's and Standard & Poor's.

PNC Securities Corp. priced $31 million Trinity Area School District, Washignton County, Pa., GO bonds.

The offering included serials priced to yield from 5.50% in 1997 to 6.50% in 2005.

The 1994-96, 2000, and 2006 and 2011 maturities were not formally reoffered to investors.

The issue is triple-A rated by both Moody's and Standard & Poor's.

Ziegler Securities as senior manager tentatively priced $20 million Kentucky Development Finance Authority hospital facilities revenue bonds for the St. Claire Medical Center Inc. project.

The offering included serials priced to yield from 5.50% in 1993 to 6.70% in 2002.

A 2008 term is priced to yield 7.20% and a 2021 term, containing $13.6 million of the issue, was not formally reoffered to investors.

The bonds are rated A-minus by Standard & Poor's Corp.

Staff reporter John J. Doran contributed to this column.

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