The municipal market was largely unchanged yesterday with a slightly weaker tone, as several of the week's largest new issues were priced in the primary market.Traders said tax-exempt yields were flat to higher by one basis point in spots.

"We're seeing a little bit of weakness out there, but overall, the market is just more unchanged than anything else," a trader in Los Angeles said.

"There are some bits and pieces trading, not a great deal of activity, but things are trading, and business is getting done. It's a bit of a slow easing our way back after the long weekend, but things will continue to pick up as the week moves forward, and by the early part of next week, I'd think activity will pick up fairly significantly. Right now, though, it's mostly quiet, and mostly flat."

"It's quiet, and there isn't a ton of movement, but it feels a little bit weaker, mostly on the long end," a trader in New York said. "There's a bit more activity in the secondary than there was yesterday, but it's still somewhat quiet. The new-issue calendar is pretty light this week, and I think it might take until next week to really get everyone back into the market full force. As for today, I'd say maybe a bit weaker in spots, but mostly unchanged."

Yesterday, however, the new-issue market was at its most active point of the holiday-shortened week, with over $1 billion of bonds coming to market.

In the new-issue market yesterday, Merrill Lynch & Co. priced $518.4 million of unlimited-tax general obligation Build America Bonds for the Chicago Board of Education. The bonds mature from 2017 through 2024, with term bonds in 2029 and 2039. Yields range from 4.68% in 2017 to 6.14% in 2039, all priced at par, or from 3.04% in 2017 to 3.99% in 2039 after the 35% federal subsidy.

The bonds were priced to yield between 120 and 200 basis points over comparable Treasury yields. The bonds feature a make-whole call at Treasuries plus 35 basis points.

About $40 million of tax-exempt GOs were priced. The bonds are rated A1 by Moody's Investors Service, AA-minus by Standard & Poor's, and A-plus by Fitch Ratings.

Morgan Stanley priced $208.9 million of taxable and tax-exempt electric revenue bonds for North Carolina Municipal Power Agency No. 1. The $199.6 million tax-exempt series matures from 2021 through 2026, with term bonds in 2030. Yields range from 4.125% priced at par in 2021 to 4.75% with a 5% coupon in 2030.

The bonds, which are callable at par in 2019, are rated A2 by Moody's and A by both Standard & Poor's and Fitch. The deal also contains a $9.3 million taxable component, which matures in 2021, yielding 5.48% priced at par. The bonds were priced to yield 200 basis points over the comparable Treasury yield.

Morgan Stanley also priced $68.7 million of taxable BABs for power agency. The BABs mature in 2032, yielding 6.18% priced at par, or 4.02% after the 35% federal subsidy. The bonds were priced to yield 185 basis points over the comparable Treasury yield.

The Florida State Board of Education competitively sold $156.4 million of public education capital outlay refunding bonds to JPMorgan with a true interest cost of 3.26%.

The bonds mature from 2010 through 2023, with yields ranging from 1.72% with a 5% coupon in 2013 to 3.72% with a 5% coupon in 2023. Bonds maturing from 2010 through 2012 and in 2014 were not formally re-offered.

The bonds, which are callable at 101 in 2019, declining to par in 2020, are rated Aa1 by Moody's, AAA by Standard & Poor's, and AA-plus by Fitch.

Morgan Stanley priced $146.7 million of education facilities refunding revenue bonds for St. Joseph County, Ind. The bonds mature in 2036, yielding 4.28% with a 5% coupon. The bonds, which are callable at par in 2018, are rated Aaa by Moody's.

The Treasury market showed losses yesterday. The yield on the benchmark 10-year note, which opened at 3.49%, was quoted near the end of the session at 3.53%.

The yield on the two-year note was quoted near the end of the session at 0.95% after opening at 0.93%. The yield on the 30-year bond, which opened at 4.31%, was quoted near the end of the session at 4.38%.

As of Tuesday's close, the triple-A muni scale in 10 years was at 83.5% of comparable Treasuries, according to Municipal Market Data, and 30-year munis were 98.1% of comparable Treasuries. As of Tuesday's close, 30-year tax-exempt triple-A GOs were at 101.7% of the comparable London Interbank Offered Rate.

Elsewhere in the new-issue market yesterday, Oyster Bay, N.Y., competitively sold $134 million of bond anticipation notes to JPMorgan with a net interest cost of 0.44%. The Bans mature in Sept. 2010, and were not formally re-offered. The credit is rated SP-1-plus by Standard & Poor's.

Morgan Stanley priced $92.5 million of public improvement refunding GOs for Puerto Rico. The bonds mature in 2030 and 2031, yielding 4.93% with a 5.25% coupon and 5.00% priced at par, respectively.

The bonds, which are insured by Financial Security Assurance Inc., are callable at 101 in 2020, declining to par in 2021. The underlying credit is rated Baa3 by Moody's and BBB-minus by Standard & Poor's.

Colorado's Boulder Valley School District No. RE-2 competitively sold $53.6 million of GO refunding bonds to Morgan Stanley with a TIC of 2.56%. The bonds mature from 2010 through 2018, with yields ranging from 0.50% with a 2% coupon in 2010 to 2.81% with a 4% coupon in 2018. The bonds, which are not callable, are rated Aa2 by Moody's and AA by both Standard & Poor's and Fitch.

New York's William Floyd Union Free School District competitively sold $35 million of tax anticipation notes to Janney Montgomery Scott LLC with a NIC of 0.60%. The Tans mature in June 2010, and were not formally re-offered.

New York's Huntington Union Free School District competitively sold $25 million of tax anticipation notes to Jefferies First Albany with a NIC of 0.46%. The Tans mature in June 2010, and were not formally re-offered.

The economic calendar was light yesterday.

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