The municipal market was slightly weaker yesterday, following Treasuries, which showed losses after billionaire Warren Buffett announced that he offered to reinsure $800 billion of municipal bonds backed by Ambac Assurance Corp., MBIA Insurance Corp., and Financial Guaranty Insurance Co.

Traders said tax-exempt yields were higher by about three basis points.

"We're definitely a little bit weaker following what Buffett had to say [yesterday] morning, and that's all springing off what's going on in the Treasury market," a trader in New York said. "Munis aren't seeing quite as much weakness, and in some spots we're still actually quite unchanged. But on the whole, you're seeing a basis point or two, maybe three in some spots."

The Treasury market showed some losses yesterday, but also showed very mild gains on the short end following a late move. Yields in the Treasury market were higher by as much as eight basis points earlier in the session. The yield on the benchmark 10-year Treasury note, which opened at 3.62%, finished at 3.65%. The yield on the two-year note was quoted near the end of the session at 1.90%, after opening at 1.91%.

"Treasuries turned around some in the latter part of the day, but the muni losses held," a trader in Los Angeles said.

In the new-issue market yesterday, JPMorgan priced $1 billion of revenue bonds for New York's Metropolitan Transportation Authority in two series. Bonds from the larger $600 million series mature in 2009, 2010, from 2016 through 2018, and from 2036 through 2038. Yields range from 2.00% with a 4% coupon in 2009 to 4.85% with a 4.5% coupon in 2038. These bonds are callable at par in 2017. Bonds from the smaller $400 million series of mandatory tender bonds mature in 2016, 2022, 2025, and 2028, yielding 3.00%, 3.21%, 3.38%, and 3.52%, respectively, all with 5% coupons. The bonds are not callable. The credit is rated A2 by Moody's Investors Service and A by Standard & Poor's and Fitch Ratings.

Morgan Stanley priced $119.5 million of unlimited-tax bonds for the Round Rock, Tex., Independent School District. The bonds mature in 2009 and from 2012 through 2029, with a term bond in 2033. Yields range from 2.59% with a 4% coupon in 2012 to 4.42% with a 5% coupon in 2033. Bonds maturing in 2009 were decided via sealed bid. The bonds, which are callable at par in 2018, are rated Aa2 by Moody's and AA by Standard & Poor's.

Howard County, Md., competitively sold $111.6 million of consolidated public improvement bonds to Banc of America Securities LLC in two series. The underwriter won the larger $107.5 million series with a true interest cost of 3.99%. The bonds mature from 2009 through 2028, with yields ranging from 2.05% with a 3% coupon in 2010 to 4.36% with a 4.25% coupon in 2028. Bonds maturing in 2009 and from 2020 through 2026 were not formally re-offered.

Banc of America also won the smaller $4.1 million series with a TIC of 4.27%. The bonds mature from 2009 through 2027, with term bonds in 2030, 2033, and 2038. Yields range from 2.0% with a 3% coupon in 2010 to 4.29% with a 4.25% coupon in 2027. Bonds maturing in 2009, 2030, 2033, and 2038 were not formally re-offered. All bonds are callable at par in 2016. The bonds are rated triple-A by the three major credit agencies.

Banc of America also priced $104.9 million of bonds for the Tomball, Tex., Independent School District in two series. Bonds from the larger $103.2 million series of unlimited-tax school building and refunding bonds mature from 2009 through 2027, with term bonds in 2029 and 2033. Yields range from 1.25% with a 3% coupon in 2009 to 4.65% with a 4.75% coupon in 2033. The bonds are callable at par in 2017. The deal also contains a $1.6 million series of unlimited-tax school building and refunding capital appreciation bonds. The bonds mature in 2015, and are not callable. All bonds are insured by the Permanent School Fund guarantee program. The underlying credit is rated A1 by Moody's and A-plus by Standard & Poor's.

Pima County, Ariz., competitively sold $100 million of general obligation bonds to Merrill Lynch & Co., with a net interest cost of 3.85%. The bonds mature from 2008 through 2022, with yields ranging from 1.10% with a 3% coupon in 2009 to 4.13% with a 4% coupon in 2022. Bonds maturing in 2009, 2013, and 2014 were not formally re-offered. The bonds, which are callable at par in 2018, are insured by Financial Security Assurance Inc. The underlying credit is rated Aa3 by Moody's and AA-minus by Standard & Poor's.

Pennsylvania's Central Bucks School District competitively sold $94.2 million of GOs to Banc of America with a TIC of 4.19%. The bonds mature from 2009 through 2020, and from 2023 through 2026. Yields range from 2.12% with a 3% coupon in 2010 to 4.40% with a 4.375% coupon in 2026. Bonds maturing in 2009, 2014, 2015, and 2024 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa2 by Moody's.

New York City competitively sold $75 million of taxable GOs to Citi with a TIC of 4.89%. The bonds mature from 2018 through 2020. None of the bonds were formally re-offered. The bonds, which are not callable, are rated Aa3 by Moody's, AA by Standard & Poor's, and AA-minus by Fitch.

The economic calendar was largely free of major economic data yesterday. e_SRitq

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