Markets

Hedge funds and cross-over investors are expected to devour Puerto Rico's junk-rated sale of general obligation bonds when the $3 billion deal thunders into the primary market, municipal observers said.

Municipal mutual funds reported inflows slowed to $99.48 million in the week ended March 5 from $247 million of inflows the week before. Assets of all weekly reporting municipal funds increased to $281.69 billion, up from $280.11 billion, Lipper FMI reported.

Bond Buyer indexes showed weakening in the week ending Feb. 27.

Some muni strategists are saying investors should look to intermediate and longer term bonds to mitigate interest rate risk, as rising prices for short-term bonds begin to outweigh the protection their maturities offer.

The total net assets of weekly reporting tax-exempt money market funds slipped to $268.64 billion after outflows of $683.2 million in the week ended March 3, according to The Money Fund Report, a service of iMoneyNet.com.

A $1.1 billion Texas Transportation Commission revenue offering and a $700 million New York City general obligation sale this week will pump some life into the lackluster new-issue market.

The governments of Los Angeles plan to issue $5.5 billion in debt over the next year, Los Angeles City Administrative Officer Miguel Santana told Los Angeles' 2nd Regional Investors Conference

Municipal mutual funds reported inflows slowed to $247 million in the week ended Feb. 26 from $320.04 million of inflows the week before.

Tax-exempt money market funds recaptured more than half of last week's loss as they gained $1.29 billion in new cash, boosting total net assets to $269.33 billion.

S&P raised its GO rating for Amherst, Mass., home of the University of Massachusetts, to AA-plus from AA, citing the town's strong budgetary performance.