The municipal market was weaker yesterday. Traders said tax-exempt yields were higher by four or five basis points.

"We started off really down not so much, but the market has weakened some from [the] morning," a trader in San Francisco said. "We're off a solid four or five basis points right now, though it's less in some spots. Still, not quite as much weakness as we've seen the last couple days, but bonds are still cheapening up."

Trades reported by the Municipal Securities Rulemaking Board yesterday showed losses. A dealer sold to a customer insured Illinois 5s of 2028 at 5.01%, up five basis points from where they were sold Wednesday. A dealer sold to a customer Georgia 4.5s of 2027 at 4.42%, four basis points higher than where they traded Wednesday. A dealer sold to a customer Virginia 4.5s of 2026 at 4.05%, up three basis points from where they were sold Wednesday. Bonds from an interdealer trade of Michigan Municipal Bond Authority 5s of 2026 yielded 4.81%, three basis points higher than where they were sold yesterday.

The Treasury market showed mostly losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 2.54%, was quoted near the end of the session at 2.58%. The yield on the two-year note was quoted near the end of the session at 0.77%, after opening at the same level. And the yield on the 30-year bond, which opened at 3.16%, was quoted near the end of the session at 3.25%.

In the new-issue market yesterday, Siebert, Brandford, Shank & Co. priced $645 million of second-resolution new-money and refunding bonds for the New York City Municipal Water Authority. Due to strong demand, the agency was able to up-size the new-money portion of the sale to $460 million from $300 million, and it also added a refunding component to the sale, totaling an additional $185 million of refunding bonds, according to a press release.

Pricing information on the deal was not available by press time, but yields on Wednesday's retail order period ranged from 2.34% in the 2014 maturity to 5.5% in the 2040 maturity. According to the press release, during the one-day retail order period Wednesday, which continued concurrently with the institutional order period yesterday, the water authority received approximately $97 million of retail orders.

The credit is rated Aa3 by Moody's Investors Service, AA-plus by Standard & Poor's, and AA by Fitch Ratings.

In other new-issue activity, Siebert Brandford also priced $153.6 million of general obligation bonds for Illinois' Community College District No. 512. The bonds mature from 2009 through 2026, with term bonds in 2028. Yields range from 0.97% with a 2% coupon in 2009 to 5.08% with a 4.5% coupon in 2028. The bonds, which are callable at par in 2018, are rated Aaa by Moody's.

Banc of America Securities LLC priced $150 million of GOs for the San Francisco Unified School District. The bonds mature from 2009 through 2024, with yields ranging from 1.62% with a 3% coupon in 2011 to 4.71% with a 5.25% coupon in 2024. Bonds maturing in 2009 and 2010 were not formally re-offered. The bonds, which are callable at par in 2019, are rated Aa3 by Moody's and AA-minus by Standard & Poor's.

The Fulton County, Ga., School District competitively sold $130 million of short-term notes to Wachovia Bank NA with a net interest cost of 0.59%. The notes mature in Dec. 2009, with a 2% coupon, and were not formally re-offered. The credit is rated MIG-1 by Moody's.

Citi priced $120 million of revenue bonds for the Maryland Health and Higher Educational Facilities Authority. The bonds mature from 2012 through 2015, with term bonds in 2019, 2029, and 2039. The bonds, which are callable at par in 2019, are rated A3 by Moody's and A-minus by both Standard & Poor's and Fitch.

JPMorgan priced $118.3 million of transmission project revenue bonds for the Southern California Public Power Authority. The bonds mature from 2019 through 2023, with yields ranging from 3.87% with a 4% coupon in 2019 to 4.88% with a 5% coupon in 2023. The bonds, which are callable at par in 2019, are rated Aa3 by Moody's and A-plus by Standard & Poor's.

In economic data released yesterday, initial jobless claims for the week ended Jan. 17 came in at 589,000, after a revised 527,000 the previous week. Economists polled by Thomson Reuters had predicted 540,000 initial jobless claims.

Continuing jobless claims for the week ended Jan. 10 came in at 4.607 million, after a revised 4.510 million the prior week. Economists polled by Thomson had predicted 4.550 million continuing jobless claims.

Housing starts came in at 550,000 in December, after a revised 651,000 the previous month. Economists polled by Thomson had predicted 610,000 housing starts.

Building permits came in at 540,000 in December, after 615,000 the previous month. Economists polled by Thomson Reuters had predicted 610,000 building permits.

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