Hillary Flynn

Deals may take a back seat to vacations, as the few expected issuances could have trouble getting done next week because of the fourth of July holiday, investors said.

The New York Environmental Facilities Corporation's $213 million bond sale earlier in June showed green bonds offer issuers an opportunity to diversify their investor base by bringing in buyers who do not typically purchase municipal bonds.

Competitive issuance this week appears to have reached its highest volume in the past seven weeks and next week should top that level.

The Texas Transportation Commission increased the size of its general obligation mobility-fund refunding bond sale on Thursday because demand for municipals jumped as the market strengthened, according to investors.

Municipal bond fund inflows dropped by more than 50% this week. Inflows for all municipal bonds funds declined to $147.7 million for the week ending June 18 from $306.9 million the week before, according to Lipper FMI.

The Metropolitan Transportation Authority lowered yields on its $500 million transportation revenue bonds during institutional sale Thursday.

Six of the eight largest municipal bond sales that came to market this week were increased from their originally scheduled amount.

Municipal bonds are outperforming Treasuries on Friday.

Next week's issuance is led by a mammoth competitive Georgia general obligation deal scheduled to come on Tuesday that totals nearly $1 billion.

Inflows into all municipal bond funds increased from last week without climbing back to May's levels.

Goldman Sachs lowered the yields on the $537 million Houston utilities system first lien revenue and refunding bonds that were priced on Thursday.

Scheduled volume is projected to jump to $8.67 billion in the coming week, a level that may not be sustainable beyond the end of the month, municipal market participants said.

This year's higher taxes played a secondary role as demand for municipal bonds surged after April 15 tax deadline passed, according to analysts.

Hedge funds and other non-traditional buyers will exit the municipal market place if munis continue to grow more expensive relative to Treasuries, BlackRock said.

Municipal bond funds reported inflows slowed to $192.27 million for the week ending June 5 from $634.48 million the week before, according to Lipper FMI.

New York State Environmental Facilities Corp.'s sale of $213.2 million of revolving funds revenue bonds attracted demand in a softening municipal bond market Tuesday, as investors gravitated to debt from the infrequent issuer.

Issuance declined by 13% in May from April's already low levels, defying analysts' predictions supply would pick up further into the second quarter.

Weekly municipal bond volume is forecast to jump to $6.5 million in the coming week, providing a measure of relief to a supply-starved market.

Investors' ravenous demand for high-yield municipal bonds has created an optimal environment for lower-rated issuers, analysts say.

Airport deals will dominate the shortened holiday week, as volume drops to a scheduled $4.1 billion from $6.24 billion in the past week.