Markets

Weekly reporting municipal bond mutual funds had a net outflow of $1.1 billion during the period ending Oct. 8, AMG Data Services reported.

Nearly all The Bond Buyer's weekly yield indexes increased this week amid "very sloppy" conditions in the municipal market.

Outflows have continued to slow and more new cash has begun to find its way back to tax-exempt money market funds over the last week.

Amid the ongoing turmoil that plagued the financial and credit markets in the first half of 2008, the nation's commercial and savings banks experienced slight negative growth in their municipal bond portfolios. The holdings declined by 1.0% to $142.7 billion on a cost basis and by 2.7% to $141.1 billion on fair-value basis through June 30, according to data from Sheshunoff Information Services Inc.

The deep freeze that the primary market has endured the last two weeks may begin to thaw a bit this week, aided by the much-anticipated news on Friday that the House approved the $700 billion financial rescue plan. But some market participants said it was too early to expect new-issue business to bounce back quickly given that the nation's economic crisis is far from over.

Weekly reporting municipal bond mutual funds had a net outflow of $848 million during the period ending Sept. 24, AMG Data Services reported.

The Bond Buyer's weekly yield indexes rose this week, amid continued market turmoil and uncertainty over a federal bailout package.

Tax-exempt money market funds continue to show signs of gradual improvement this week. The pace of outflows have slowed and the attractive high rates compared to taxable money market funds are enticing yield-starved investors looking for buying opportunities as Congress continues to grapple with the nation's current economic slump.

WASHINGTON - Morgan Stanley announced Monday it will refinance illiquid auction-rate preferred shares with tender options bonds, created from municipal securities in 10 of its closed-end municipal funds, to escape high interest rates and provide liquidity to its auction-rate securities investors.

DALLAS - Rating analysts have placed $1.23 billion of prepaid gas bonds from Salt Verde Financial Corp. on watch for possible downgrade based on the credit rating of counterparty Citigroup.