James Ramage

If allegations that banks manipulated Libor prove to be true, those actions likely cost municipal bond issuers with swaps linked to the rate tens of millions of dollars, according to experts.

Primary issuance in the municipal market should return to pre-holiday levels this week following its seasonal holiday volume slide. Industry estimates anticipate $7.07 billion reaching the market.

With negligible primary volume, meager activity in the secondary and thinned trading desks, the Fourth of July holiday put the municipal market on ice this week. Muni bond indexes mostly fell, reflecting a slight fall in triple-A yields.

The holiday week slowed the tax-exempt market down to a crawl, but investors still invested in municipal bond mutual funds. Those funds that report their flows weekly saw $317 million of inflows for the week ended July 4.

Refundings have pushed new issuance of long-term municipal bonds to a 63% increase through the first six months of 2012 over the same period in 2011. Volume totaled $190.5 billion on 6,826 deals through the first half of 2012, versus $117 billion on 4,859 deals through the first six months of 2011. In June 2012, issuance climbed 27% from the same month one year prior.

As many traders and investors take vacations, the municipal market anticipates slight new issuance for the Fourth of July holiday week. The market expects that municipal bonds to be sold this week will total a scant $51.7 million.

An uninspiring week of frozen yields in the municipal bond market could not put a stop to the inflows pouring into muni bond mutual funds. Muni bond funds saw $625 million of inflows from funds that report their flows weekly for the week ended June 27, compared with net inflows of $555 million the week ended June 20.

Muni bond indexes on the week are down slightly or unchanged. Despite the lackluster week, traders say primary deals have been well-received and yields in the secondary, on moderate activity, have been mixed.

Refundings have dominated the new supply of municipal bonds so far in 2012. They've been driving up demand by taking higher coupon bonds out of the market

Refundings have dominated the new supply of municipal bonds so far in 2012. They've been driving up demand by taking higher coupon bonds out of the market.

At an anticipated $8.11 billion, municipal bond issuance this week should subside slightly. But because investors are neck-deep in heavy cash flows, the market has been absorbing healthy calendars over the past few weeks with only modest concessions to yields.

Muni bond indexes were mixed on the week as the need to put truckloads of reinvestment money to work pushed investors to buy munis even while yields sat at barrel-scraping levels

After amassing $555 million of inflows for the week ended June 20, muni bond mutual funds that report their flows weekly have now seen inflows for 10 consecutive weeks.

Morningstar, Inc. will soon enter the municipal bond research business. It plans to offer credit quality and price discovery products and services on the municipal market to registered reps, asset managers, banks and insurance firms likely over the next three months.

The municipal bond market expects another reasonably healthy week of new issuance. The Massachusetts Building Authority leads the charge with an expected pricing of $750 million of sales tax refunding bonds.

Municipal bond mutual funds continued their hot streak. As the market saw modest firming on the week, muni bond funds saw inflows for a ninth consecutive week.

The municipal bond market emerged from a week of heavy issuance somewhat stronger past the front end of the yield curve.

Despite Treasury outperformance and cheap ratios to municipal bonds, crossover buyers are keeping their distance from the tax-exempt market.

Robert W. “Bob” Chamberlin, who was among the first generation of full-time municipal bond analysts, died last week. He was 74.

SumRidge Partners wants to help the growing number of independent wealth management firms trade faster and access more information when devising strategies for the municipal bond market.