Markets

WASHINGTON — States slowed their borrowing dramatically, with a growth of only 2.5% in 2011, despite low interest rates, according to a new Moody’s Investors Service report.

Volume in the municipal market is bulking up this week. The industry expects $9.19 billion to reach the primary, compared with $6.83 billion that arrived last week. And it should meet a degree of demand largely unscathed from last week’s slight backup.

The hunger for paper and search for yield in the municipal market reached their limits this week.

Some retail investors are being more cautious when shopping for tax-exempt bonds in Pennsylvania, but overall, that hasn't decreased the volume of trading in the state, according to local traders and underwriters.

Municipal bond mutual funds again posted solid inflows in a week of modest new issuance that saw a backup in yields.

The first inflows into tax-exempt money market funds in nearly a month were gone almost as quickly as they arrived when $2.17 billion exited in the week ended May 14, eroding much of last week’s gains, according to the Money Fund Report, a service of iMoneyNet.com.

Individual investors have been flocking to municipal bond funds, searching for safety and relatively high yields.

Retail investors continue to rank credit quality high at the top of their list of criteria when shopping for municipal securities, whether they be individual bonds or tax-exempt bond funds.

Standard & Poor's has released a credit conditions forecast that is more positive for states than for localities.