The municipal bond market climbed higher in price as light supply and expected slowing in outflows from municipal bond funds created an opportunity for buyers.

Throughout the trading session Thursday, market participants said there was more conviction from buyers than earlier in the week.

"The market is very strong actually," a Chicago trader said. "There were some trades at really tight levels this morning."

While municipal bond funds are expected to see the 16th consecutive week of outflows, some think redemptions are starting to slow. "Large funds maybe feel less pressure on flows," the trader said.

Lipper FMI should report fund flows later Thursday. Through last week, investors withdrew $24.6 billion in 15 weeks.

In the primary market Thursday, Goldman, Sachs & Co. priced and repriced $188.4 million of Turnpike Authority of Kentucky economic development road revenue bonds, rated Aa2 by Moody's Investors Service, AA-plus by Standard & Poor's, and A-plus by Fitch Ratings.

Yields ranged from 0.43% with a 2% and 5% coupon in a split 2015 maturity to 4.70% with a 4.625% coupon and 4.66% with a 5% coupon in a split 2033 maturity. The bonds are callable at par in 2023. Yields were lowered between one and four basis points on bonds maturing between 2024 and 2033 from preliminary pricing.

In the competitive market, Richmond, Va., auctioned $139 million of general obligation bonds, rated Aa2 by Moody's and AA-plus by Standard & Poor's and Fitch.

Barclays won the bid for the first pricing of $127.7 million of public improvement bonds. Yields ranged from 0.16% with a 2% coupon in 2014 to 4.25% with a 5% coupon in 2033. The bonds are callable at par in 2023. Bonds with 5% coupons maturing between 2020 and 2033 were priced 22 to 28 basis points richer than Wednesday's double-A Municipal Market Data scale.

Raymond James & Associates won the bid for $11.3 million of taxable public improvement bonds. Yields ranged from 1.16% with a 3% coupon in 2016 to 4.85% with a 4.8% coupon in 2033.

On Wednesday, yields on the triple-A Municipal Market Data scale ended as much as four basis points firmer. The 10-year yield fell four basis points to 2.95% and the 30-year yield dropped two basis points to 4.46%. The two-year was steady at 0.43% for the 40th straight session.

Yields on the Municipal Market Advisors scale ended as much as three basis points lower. The 10-year and 30-year yields fell two basis points each to 3.10% and 4.57%, respectively. The two-year closed unchanged at 0.55% for the 19th session.

Treasuries continued to post gains Thursday afternoon. The benchmark 10-year and 30-year yields fell four basis points each to 2.88% and 3.82%, respectively. The two-year yield slid one basis point to 0.44%.

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