Finance

Yields on top-rated municipal bonds fell as much as nine basis points on Friday as bank contagion fears resurfaced and investors looked to safe-haven securities. The primary calendar is rebounding, with volume rising to an estimated $5.4 billion in the week ahead.

The state House Appropriations Committee dropped $3.86 billion from a supplemental spending bill, but its chair said the money is "still in play."

The rating action affects $423 million in bonds and certificates of participation. The territory's issuer rating was affirmed at speculative-grade Ba1.

Outflows continued as Refinitiv Lipper reported $427.082 million was pulled from municipal bond mutual funds in the week that ended Wednesday after $461.123 million of outflows the week prior.

"In short, it appears that the end of the current tightening cycle is coming into view," said Wells Fargo Securities Chief Economist Jay Bryson.

After a tumultuous week, expect another ahead, said Matt Fabian, a partner at Municipal Market Analytics.

Redwood City-based Summit Public Schools had its bond rating downgraded to Ba3 from Baa3 by Moody's and its outlook revised to negative.

The $250 million in debt being issued for Montana Renewables is equal to nearly half the state's issuance for last year.

The banking sector crisis caused a flight-to-quality bid in USTs last week.

The reverberations from the Silicon Valley Bank and Signature Bank failures make the outcome of this week's Federal Open Market Committee meeting unpredictable.

Investors will be greeted Monday with a new-issue calendar estimated at $4.064 billion.

Outflows continued as Refinitiv Lipper reported $461.123 million was pulled from municipal bond mutual funds in the week that ended Wednesday after $307.815 million of outflows the week prior.

"The main question for investors recently has been: will we see bank selling of municipals that exerts pressure on the market, and what kind of market effects could occur," Barclays strategists said.

Moody's Investors joined S&P Global Ratings in lifting the state into the A category with a single notch upgrade to A3 Tuesday.

"The muni market is no different than others, where fear and greed drive the trends," said Peter Delahunt, StoneX's managing director.

Triple-A benchmarks have fallen five to 10 basis points, depending on the scale.

The Treasury Department issued a "systemic risk exception" allowing it to cover uninsured deposits at SVB and Signature Bank, which New York State closed on Sunday.

Investors will be greeted Monday with a new-issue calendar estimated at $6.041 billion.

A $3.52 billion Texas Natural Gas Securitization Finance Corp. deal includes a make-whole redemption over three years to call bonds if the state appropriates funds to pay them off.

Governance decisions and rapidly escalating deficits contributed to Moody's decision to cut Illinois Tech's rating two notches to speculative grade.