While the municipal market was quiet and mostly unchanged yesterday, the primary market was active, as the Ohio Higher Educational Facilities Commission came to market with more than $800 million of bonds, and the Metropolitan Water Reclamation District of Greater Chicago sold $600 million of taxable BABs."We're pretty flat," a trader in New York said. "We're seeing a nice little uptick in Treasuries, but it's not really translating over to our market. We're just pretty deeply entrenched in the summer doldrums over here. There are some deals coming this week that are going to get some interest though, a few larger issues. So there's that at least. But I'm not seeing a whole lot to write home about in the secondary. It just feels pretty quiet out there, definitely flat."

In the new-issue market yesterday, an $804.4 million hospital deal from the Ohio Higher Educational Facilities Commission on behalf of the Cleveland Clinic Health System was priced for institutions by JPMorgan, following a retail order period Monday.

The deal's two parts consist of $306.4 million of Series 2009A revenue refunding bonds structured as one bullet maturity due in 2039, which yield 5.58% with a 5.5% coupon, and $498 million of Series 2009B new-money bonds maturing serially from 2011 to 2029 with terms in 2034 and 2039.

Yields in that series range from 1.81% with a 3% coupon in 2011 to 5.58% with a 5.5% coupon in 2039. All bonds in both series are callable at par in 2019, except for a portion of Series B bonds maturing in 2034, which are callable at par in 2014. The bonds carry ratings of Aa2 from Moody's Investors Service and AA-minus from Standard & Poor's.

Meanwhile, Mesirow Financial Inc. priced the $600 million BAB deal for the triple-A rated Metropolitan Water Reclamation District of Greater Chicago. The bonds mature in 2038, yielding 5.72%, or 3.72% after the 35% federal subsidy. The bonds were priced to yield 125 basis points over the comparable U.S. Treasury yield.

"This deal continues to show the depth and breadth of the BAB market," said Dominick Mondi, senior managing director at Mesirow. "It got great distribution, it's a great credit. It was very well received by 85 different accounts, and traded up in the secondary market. And it posted a record low yield for BABs."

The deal, which is rated triple-A by all three major ratings agencies, is subject to a make-whole redemption at Treasuries plus 35 basis points, and an extraordinary make-whole call at Treasuries plus 100 basis points.

Morgan Stanley priced for retail investors $600 million of future tax secured subordinate bonds for the New York City Transitional Finance Authority. The bonds mature from 2010 through 2024, with yields ranging from 0.83% with a 2% coupon in 2011 to 4.06% with a 4% coupon in 2024. Bonds maturing in 2010 will be decided via sealed bid. Bonds maturing in 2021 and 2022 were not formally re-offered. The bonds, which are callable at par in 2019, are rated Aa2 by Moody's, AAA by Standard & Poor's, and AA-plus by Fitch Ratings.

Merrill, Lynch & Co. priced $181.8 million of taxable Build America Bonds for the Texas Public Financing Authority. The bonds mature from 2020 through 2025, with a term bond in 2029. Yields range from 5.13% in 2020, or 3.34% after the 35% federal subsidy, to 6.07% in 2029, or 3.95% after the subsidy.

All bonds are priced at par, and priced to yield between 140 and 220 basis points over the comparable U.S. Treasury yields. The bonds, which are callable at par in 2019, are rated Aa1 by Moody's and AA-plus by both Standard & Poor's and Fitch.

Citi priced $173.1 million of water revenue bonds for California's Stockton Public Financing Authority, in two series, including $154.6 million of taxable BABs. The BABs mature from 2017 through 2019, with term bonds in 2034 and 2038. Yields range from 6.09% in 2017, or 3.96% after the 35% federal subsidy, to 7.94% in 2038, or 5.16% after the subsidy.

All bonds are priced at par, and are priced to yield between 240 and 260 basis points over the comparable U.S. Treasury yields. The bonds are callable at par in 2019. The deal also contains an $18.6 million tax-exempt component, which matures from 2012 through 2016, with yields ranging from 2.25% with a 4% coupon in 2012 to 3.76% with a 5% coupon in 2016. These bonds are not callable. The credit is rated A by both Standard & Poor's and Fitch.

The Treasury market showed gains yesterday. The yield on the benchmark 10-year note, which opened at 3.78%, was quoted recently at 3.68%. The yield on the two-year note was quoted recently at 1.18% after opening at 1.24%. The yield on the 30-year bond, which opened at 4.53%, was quoted recently at 4.44%.

As of Monday's close, the triple-A muni scale in 10 years was at 78.8% of comparable Treasuries, according to Municipal Market Data. Thirty-year munis were 102.6% of comparable Treasuries. As of the close Monday, 30-year tax-exempt triple-A general obligation bonds were at 104.7% of the comparable London Interbank Offered Rate.

In economic data released yesterday, preliminary second quarter unit labor costs fell 5.8%, after a revised 2.7% drop the previous reading. Economists polled by Thomson Reuters had predicted a 2.4% decline.

Wholesale sales rose 0.4% in June, after a revised 0.4% gain the previous month. Economists polled by Thomson had predicted a 0.5% uptick. Wholesale inventories fell 1.7% in June, after a revised 1.2% drop the previous month. Economists polled by Thomson Reuters had predicted a 0.9% decrease.

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