Markets

Tax-exempt money market funds posted the second-largest outflows of the year — and more than doubled last week’s losses — as the total invested fell $5.42 billion to $363.09 billion in net assets for the week ending April 19, according to the Money Fund Report, a service of iMoneyNet.com.

Many of the biggest property and casualty insurers have been paring their holdings of municipal bonds to shield themselves from exposure to troubled state and local government credit.

Moody’s Investors Service kicked off a wide-scale “upward shift” in municipal credit ratings yesterday, assigning stronger grades to 34 states and Puerto Rico.

Two large state general obligation deals consisting of taxable Build America Bonds are headed to the market this week amid an estimated $5.58 billion in total new volume, according to Ipreo LLC and The Bond Buyer.

Investors withdrew more cash from municipal bond mutual funds than they invested last week for the second time in less than a month, possibly heralding the end of the tidal wave of money that has washed over the industry for more than a year.

Nearly all The Bond Buyer’s weekly yield indexes declined this week, as the municipal market rebounded from last week’s losses.

Reversing the gains they accumulated last week, tax-exempt funds were hit with outflows of $2.10 billion and finished with total net assets of $368.51 billion for the week ending April 12, according to the Money Fund Report, a service of iMoneyNet.com.

Anyone studying the path of yields on double-A or triple-A rated municipal bonds over time might want to put a little asterisk next to April 2010.