Markets

The municipal floating-rate note may have begun to take off at precisely the wrong time.

More than half of the floating-rate notes sold this year have been from state-run student loan securitization pools, nearly all with Libor as the reference rate and most underwritten by Bank of America Merrill Lynch.

Early this year, the municipal floating-rate note was fast emerging as a potent tool for local governments to maintain some variable-rate component in their debt profiles.

The municipal bond mutual fund industry shrank last week for the first time since June as investors handed over the smallest slug of new money in more than three months, with intermediate-term muni bonds absorbing the biggest hit.

After the deluge of supply last week, the municipal market will see a noticeable lull in new-issue activity this week.

The Bond Buyer's weekly yield indexes were narrowly mixed this week, as fears of a supply-driven sell-off were washed away by two days of gains, spurred by refunding postponements and rallying Treasuries.

Tax-exempt money market funds ended a string of outflows as they swept up $476.9 million of new cash the week ending Oct. 4, boosting total net assets to $332.1 billion, according to the Money Fund Report, a service of iMoneyNet.com.

The first full week of the fourth quarter gets underway with $13.13 billion of new, long-term volume, which is expected to continue to re-energize a thin and sleepy primary market, according to Ipreo LLC and The Bond Buyer.