The municipal market was unchanged yesterday, with the Treasury market firmer.

"The market is a little queasy, like it may have had a bad taco this weekend, even though Treasuries are holding in," a trader in Chicago said. "To put something out there, you have to be a bit concessionary. It's kind of like there are two different traders out there: the quick and the dead. You just have to make do."

"It's a very quiet day, not much going on," a trader in San Francisco added. "Not a lot of trading. It started off a little weaker, but came back. I'd call the market unchanged and uninterested."

The Treasury market showed little movement yesterday. The yield on the benchmark 10-year Treasury note, which opened at 4.26%, finished at 4.25%. The yield on the two-year note was quoted near the end of the session at 3.02%, after opening at the same level.

In his weekly report, George Friedlander, managing director and fixed-income strategist at Citi, wrote that Citi's economists "feel that, once the temporary stimulus from the tax rebate subsides, growth may weaken later in the year, and that could offset the need for Fed tightening."

Matt Fabian, managing director at Municipal Market Advisors, wrote that "municipals, managing their own challenges with the bond insurers, a depleted secondary market, and thin institutional demand, were unable to keep pace [with Treasury market volatility]," outperformed "Treasuries by default" last week. He noted this "encouraged large scale gains taking and other sellers eager to avoid any 'catch up' with the taxable market," leading Bloomberg's bid-wanted lists to hit a five-year high.

Fabian wrote he expects continued weakness this week.

"Large supply headlined by a troublesome state of California credit and the near certainty of more volatility in the broader markets implies steady weakness for tax-exempts," he wrote.

In the new-issue market this week, Florida's Citizens Property Insurance Corp. is hoping to lure money market fund managers to its one-year, tax-exempt note sale, which at $1.5 billion to $2 billion is the largest scheduled deal of the week.

Goldman, Sachs & Co will price the deal today. The notes are expected to carry ratings of MIG-1 from Moody's Investors Service and SP-1-plus from Standard & Poor's, and are being sold to provide liquidity for the current hurricane season, which also began on June 1.

In the new-issue market yesterday, Merrill Lynch & Co. priced $172 million in hospital revenue bonds for Reno, Nev., for the benefit of Renown Regional Medical Center. Bonds in the $30.3 million Series A mature from 2009 through 2023, with a term bond in 2028. Yields range 3.68% on a 5.25% coupon in 2009 to 5.64% on a 5.25% coupon in 2028.

Bonds from the $46.5 million Series C mature from 2009 through 2025, with term bonds in 2028, 2033 and 2039. Yields range from 2.98% on a 4.25% coupon in 2009 through 5.36% on a 5.5% coupon in 2039. Bonds from the $66 million Series A mature from 2011 through 2040, with term bonds in 2028, 2033, 2038, and 2040. Yields range from 3.9% on a 5.25% coupon in 2011 to 5.37% on a 5.25% coupon in 2040. Bonds from the $29.2 million Series B mature 2009 through 2025, with term bonds in 2028, 2033, 2037, and 2040. Yields range from 2.98% on a 4.5% coupon in 2009 to 5.37% on a 6.25% coupon in 2040.

Bonds from series A are insured by Ambac Assurance Corp. and bonds from the remaining series are insured by Financial Security Assurance Inc. Bonds from all series, which are callable at par in 2018, have underlying credit ratings of A3 from Moody's and A-minus from Standard & Poor's.

Morgan Keegan & Co. priced $79.9 million in district unlimited-tax school building bonds for the Mansfield, Tex., Independent School District. The bonds mature from 2017 through 2029, with term bonds in 2031 and 2033. Yields range from 3.93% with a 4% coupon in 2017 to 4.83% with a 5% coupon in 2033. The bonds, which are callable at par in 2017, are insured by the Permanent School Fund guarantee program and have underlying credit ratings of Aa3 from Moody's, AA from Standard & Poor's and AA-minus from Fitch Ratings.

Banc of America Securities LLC priced $73.55 million in general obligation refunding bonds and combination tax and revenue certificates of obligation for Garland, Tex. Bonds from the $57.6 million Series of GO bonds mature from 2009 through 2025, with yields ranging from 2.65% with a 4% coupon in 2010 to 4.61% with a 5% coupon in 2025. Bonds from the $15.9 million series of combination tax and revenue certificates of obligation mature from 2009 through 2028 with yields ranging from 2.65% with a 3% coupon in 2010 to 4.86% with a 4.75% coupon in 2028. Bonds from both series maturing in 2009 will be decided via sealed bid. The bonds from both series, which are callable at par in 2018, have credit ratings of AA-plus from Standard & Poor's and Fitch.

Lehman Brothers priced $41.8 million in water and sewer system revenue bonds for Garland. The bonds mature from 2009 through 2028, with yields ranging from 2.64% with a 5% coupon in 2010 to 4.76% with a 5% coupon in 2028. Bonds maturing 2009 will be decided via a sealed bid. The bonds, which are callable at par in 2018, are insured by FSA, and have underlying credit ratings of AA from Standard & Poor's and AA from Fitch.

Siebert Brandford Shank & Co. priced $70.7 million in combination flood control tax and revenue certificates of obligation for Bexar County, Tex. The bonds mature from 2009 through 2028, with term bonds in 2032 and 2038. Yields range from 2% with a 4% coupon in 2009 to 4.99% with a 4.75% coupon in 2038. The bonds, which are callable at par in 2017, have ratings of Aa1 from Moody's and AA-plus from Standard & Poor's and Fitch.

And, Merrill Lynch & Co. priced $56.6 million in combination tax revenue certificates of obligation for Bexar County. The bonds mature from 2009 through 2028, with yields ranging from 2% with a 3% coupon in 2009 to 4.86% with a 4.75% in 2028. The bonds, which are callable at par in 2017, have ratings of Aa1 from Moody's, AA-plus from Standard & Poor's, and AA-plus from Fitch.

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