Markets

Wells Fargo & Co. has launched an index tracking the performance of Build America Bonds, the hottest sector in government finance.

Wall Street's M&A business for asset management companies will be fueled by strategic expansion purchases and corporate divestitures over the coming year, according to a new survey by Jefferies Putnam Lovell.

NEW YORK - Wells Fargo & Co. has launched an index tracking the performance of Build America Bonds, the hottest sector in government finance.

Billion-dollar deals from issuers in California and Texas will dominate the municipal market this week on the heels of two similar offerings that priced last week, and at a time when investors continue to clamor for paper in the face of a nearly $50 billion supply shrinkage this year.

The prospect of higher taxes and impatience with yields available on cash continued to compel unparalleled amounts of money into municipal bond mutual funds last week.

The fees issuers pay to bankers to underwrite municipal bonds are higher then they’ve been for eight years, as the financial crisis heightened risk and decimated competition in the industry.

Tax-exempt money market funds lost the inflows they earned last week — and then some — as a result of the $2.82 billion of outflows that fled during the week ended Aug. 17 that caused the funds to settle at $446.12 billion, according to The Money Fund Report, a service of iMoneyNet.com of Westborough, Mass.

Asset managers expect it will take four to seven years to recover the assets under management lost during the economic crisis, according to a study by McKinsey & Co.

With municipal volume down nearly $50 billion so far this year, retail investors are having to look outside their comfort zones to add value to their portfolios, municipal analysts, trading, sales, and underwriting sources said.

With a gusher of new money and seemingly few alluring opportunities on which to spend it, one might guess municipal bond mutual funds would be sitting on a ton of cash.