Continuing concern about the “fiscal cliff” coupled with much more demand than supply in the municipal bond market pushed tax-exempts higher for the third session as yields fell to fresh record lows.

The municipal bond market was active Wednesday as some of the week’s largest deals priced in the primary and buyers continued to flood the secondary. Still, traders noted activity was as heavy as Tuesday.

“A lot of deals on Tuesday were accelerated from later in the week so issuers definitely captured that strength in the market,” a New York trader said. “Deals are heavily oversubscribed and yield levels were reduced.”

He added that by Wednesday afternoon, secondary activity had died down from Tuesday’s levels but the primary market was still active.

Other traders said the morning session saw a spurt of buying and then activity started to slow down a little.

“There was buying earlier this morning, but now it’s quiet,” a second New York trader said. He added that the market was still stronger after muni yields hit record lows Tuesday.

In the primary market Wednesday, Bank of America Merrill Lynch priced for institutions $491.6 million of Lower Colorado River Authority refunding revenue bonds, following a retail order period Tuesday. The bonds are rated A1 by Moody’s Investors Service and A by Standard & Poor’s and Fitch Ratings.

Yields on the first series of $289.5 million ranged from 0.43% with a 4% coupon in 2014 to 3.04% with a 5% coupon in 2039.

Bonds maturing in 2013 were offered via sealed bid. The bonds are callable at par in 2022.

Yields on the second series of $202.1 million ranged from 0.43% with a 3% coupon in 2014 to 3.47% with a 3.375% coupon and 3.02% with a 5% coupon in a split 2037 maturity.

Bonds maturing in 2013 were offered via sealed bid. The bonds are callable at par in 2022. Yields were lowered as much as 10 basis points from retail pricing.

In the competitive market, B of A Merrill won the bid for $324 million of Virginia College Building Authority educational facilities revenue bonds, rated Aa1 by Moody’s and AA-plus by Standard & Poor’s and Fitch.

Yields ranged from 0.30% with a 5% coupon in 2014 to 2.98% with a 3% coupon in 2033. The bonds are callable at par in 2022.

In the secondary market, trades compiled by data provider Markit showed strengthening. Yields on Denver City and County airport 4s of 2043 dropped four basis points to 3.39%.

Yields on Connecticut 4s of 2028 and New York City 4s of 2030 fell three basis points each to 2.40% and 2.49%, respectively.

The Municipal Market Data scale set new record low yields Wednesday on the 10-year and 30-year yields for the second consecutive session. The 10-year MMD yield fell two basis points to 1.47%, a record low. The 1.47% beat the previous record low of 1.49% set Tuesday.

The 30-year MMD yield dropped two basis points to 2.47%, also setting a record low. It beat the previous record of 2.49% set Tuesday and 2.52% set Monday.

The two-year finished steady at 0.30% for the 43rd consecutive trading session.

Treasuries ended slightly stronger though most gains were pared from the morning session. The benchmark 10-year yield fell two basis points to 1.62%. The two-year and 30-year yields were flat at 0.27% and 2.79%, respectively.

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