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UPDATE 1-U.S. muni bond sales hit $275.4 bln by end of third qtr

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Oct 1 (Reuters) - U.S. municipal bond sales totaled $275.4 billion in the first nine months of 2012, an increase of nearly 48 percent over the same period in 2011, according to Thomson Reuters data released on Monday.

Refundings of outstanding debt were up 84.5 percent over last year and accounted for 62.6 percent of issuance so far this year, fueling the big jump in debt sales. Low yields in the $3.7 trillion municipal bond market have enticed states, cities, schools and other issuers to turn to refundings to save on debt service costs.

Bank of America Merrill Lynch was the top bookrunning underwriter of munis so far this year, pricing $39 billion of debt in 342 deals. Citigroup was second with $32.6 billion in 348 deals and J.P. Morgan Securities was third with $30.7 billion in 265 deals.

The New York State Dormitory Authority was the top issuer of debt as of the end of the third quarter, selling $5.5 billion in 31 deals, Thomson Reuters reported. California ranked second with $5.2 billion in five deals, followed by Illinois with $5.1 billion in seven deals.

The biggest single long-term issue so far in 2012 was the Michigan Finance Authority's June sale of $2.9 billion of unemployment obligation assessment revenue bonds.

(Reporting by Karen Pierog; Editing by)

((karen.pierog@thomsonreuters.com)(+1 312 408 8647)(Reuters Messaging: karen.pierog.thomsonreuters.com@reuters.net))

Keywords: MUNICIPALS VOLUME/