Underwriters led by Barclays Plc priced the tax-free bonds on March 11 to yield 8.73%, or 93 cents on the dollar. It was the biggest junk-rated deal in the municipal market’s history. Hedge funds were the majority of buyers, with traditional muni investors also participating, said David Chafey, chairman of the Government Development Bank, which handles the commonwealth’s debt sales.

Investors started trading the bonds that afternoon, with $5.1 billion of the debt changing hands, or 33% of volume that day, according to the Municipal Securities Rulemaking Board, a self-regulatory organization that monitors the local- debt market. On previous Tuesdays since December, no issuer has accounted for more than 6.6% of trading, data compiled by Bloomberg show.

The bonds have gained as much as 7.5% since their initial pricing, trading as high as $1 on a $25,000 transaction on March 12, MSRB trading data show. The bonds changed hands yesterday at an average yield of 8.43%, or 95.76 cents on the dollar, Bloomberg data show.

“There’s no question that a number of institutions were looking at this as perhaps a somewhat quick flip,” said Dan Heckman, a senior fixed-income strategist in Kansas City, Missouri, at U.S. Bank Wealth Management, which oversees $115 billion. “The minute they had a decent allotment, they flipped the position to someone else at a higher price.”