The New Jersey Transportation Trust Fund Authority came to market with an upsized $412.7 million offering yesterday including taxable Build America Bonds, while the tax-exempt market continued to weaken.Traders said the market was off by as many as three to five basis points, with the weakness spilling into the new-issue market. The yield on the 30-year triple-A general obligation bond scale rose to 4.49% yesterday, up 14 basis points from last Wednesday, according to Municipal Market Data.

"It definitely feels weaker," a trader in Chicago said. "The attention is on the primary market, in which a few deals had to come a bit cheaper. If you want to get anything done in the secondary market, you're going to have to take a cut."

Traders reported a number of bid wanted lists out in the market.

"It's a little weaker, but there's not a lot of trading to get a good benchmark on things," a trader in New Jersey said. "There are some bid-wanted lists out there that are probably taking some attention away."

In the new-issue market, Merrill Lynch & Co. priced for the New Jersey Transportation Trust Fund Authority $412.7 million of transportation system bonds, including $270 million of taxable BABs. The BABs mature in 2039 with a 6.875% coupon, and came to market with an approximately 240 basis point spread over Treasuries. The bonds, which are rated A1 by Moody's Investors Service, AA-minus by Standard & Poor's, and A-plus by Fitch Ratings, have an optional call at par in June 2019, an optional make-whole call of Treasury plus 40 basis points prior to June 15, 2019, and an extraordinary make-whole call of U.S. Treasury plus 100 basis points.

The deal also included $142.7 million of capital appreciation bonds maturing 2032 through 2039, excluding 2035 and 2037. The yields to maturity ranged from 6.23% in 2032 to 6.40% in 2039. They have a make-whole call of MMD plus 30 basis points.

That portion of the deal was upsized to $142.7 million from $82.4 million, following strong demand, a spokesman for the New Jersey Treasury Department said.

RBC Capital Markets also priced for the Dormitory Authority of the State of New York $355.5 million in school district revenue bonds after pricing for retail Tuesday. Yields on the $180.6 million Series B bonds ranged from 1.22% with a 2% coupon in 2010 to 5.16% with a 5.25% coupon in 2037. Yields on the $156 million Series C bonds ranged from 1.17% with a 3% coupon in 2010 to 5.16% with a 5.125% coupon in 2039. The offering also included a $15.9 million series and a $2.3 million series.

Merrill Lynch also priced $121.25 of taxable gasoline and fuels tax revenue second-lien revenue BABs for Louisiana. The floating-rate bonds mature in 2043 with a five-year put and are indexed to 30-day LIBOR plus 250 basis points. They were initially set at 3%.

Wake County, N.C., competitively sold $169 million of GO refunding bonds to Barclays Capital at a true interest cost of 2.2967%. The bonds mature 2012 through 2018. The triple-A rated issuer last came to the market in March, selling $67.4 million of GO refunding bonds at a true interest cost of 2.1602%.

In addition, RBC Capital Markets priced $63.9 million in unlimited tax school building bonds for the Northwest Independent School District in Texas. The bonds mature from 2017 through 2032 with a term in 2034. Yields range from 3.20% with a 5% coupon in 2017 to 5% at par in 2034. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's and AA-minus by Fitch.

In California, Morgan Stanley priced $47.4 million of revenue bonds for the Santa Barbara Financing Authority. The bonds mature 2012 through 2024, with term bonds in 2029 and 2039. Yields range from 2.39% with a 4% coupon to 5.29% with a 5% coupon. The bonds, which are rated A1 by Moody's and AA-minus by Standard & Poor's, with an optional call at par in 2019.

In addition, RBC Capital Markets was scheduled to price $425.6 million of personal income tax revenue bonds for the New York State Thruway Authority, but the deal has been postponed.

"We're further evaluating program needs, but expect that it should go forward in the near future," a spokesman for the New York State Division of Budget said.

The Treasury market was generally weaker. The yield on the benchmark 10-year Treasury note, which opened at 3.55%, was quoted late in the day at 3.70%. The yield on the two-year note was quoted near the end of the day at 0.95%, after opening at 0.95%. And the yield on the 30-year bond, which opened at 4.49%, was quoted late at 4.60%.

Municipals have outperformed Treasuries significantly lately. As of yesterday, the yield on the 10-year Treasury rose 55 basis points throughout May, while the yield on 10-year, triple-A GO bonds had fallen two basis points during the same time period

The ratio between 10-year, triple-A GOs and 10-year Treasuries fell to 78.23% yesterday, its lowest point since December 2006, according to MMD. Amid the fallout from the credit crisis, the ratio peaked as high as 186.06% last December.

A trader in New York said the weakening of the Treasury market put pressure on municipals. The decline of long-term Treasuries has come as the government issues record amounts of debt.

"You've had a reversal of the Treasuries," a trader in New York said. "A lot of the trading is going to be where the Treasuries end up going for the rest of the week."

In economic data released yesterday, existing home sales in April rose to a seasonally adjusted 4.68 million-unit rate, up 2.9%. Economists polled by Thomson Reuters had predicted a 4.65 million-unit rate.

Ted Phillips contributed to this column.

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