Markets

Puerto Rico's planned debt issue may still find demand among mutual funds after the commonwealth was cut to a junk grade by Standard & Poor's, even though some fund managers are restricted from buying speculative paper.

Bond Buyer indexes were mixed the first week of February.

S&P revised the outlook to negative on CCC-rated bonds for South Carolina's Tuomey Healthcare due to a $277 million fraud judgment and operating losses.

Municipal mutual funds reported $227.3 millon of net outflows, ending three-week run of inflows, Lipper FMI reported Thurday.

Tax-exempt money market funds pared back outflows compared to last week, but still lost $426.6 million, reducing total net assets to $268.87 billion in the week ended Feb. 3, according to The Money Fund Report, a service of iMoneyNet.com.

Fitch Ratings downgraded more than $7 billion of general revenue bonds issued by the University of California to AA from AA-plus.

The state of Illinois will thunder into the primary market this week with a $1 billion sale of general obligation bonds, hoping to feed supply-hungry investors after a sluggish start to the New Year.

Municipal bond mutual funds reported inflows for a third consecutive week as they took in $338 million of net inflows for the week ended Jan. 29, Lipper FMI numbers showed.

Tax-exempt money market funds lost $2.29 billion in the week ended Jan. 27, as total net assets dipped to $269.29 billion, according to The Money Fund Report, a service of iMoneyNet.com.

A slew of research reports in the last month have touted the opportunities in the tax-exempt asset class, as interest-rates rallied and municipal prices firmed. Analysts credited everything from the return of mutual fund inflows and low volume to U.S. economic concerns and volatility overseas.