Muni bond mutual fund outflows have fallen from recent levels, but remain heavy, according to Lipper FMI numbers for the week of Aug. 7, reflecting still feeble investor demand, particularly for long bonds.
There were $974 million in outflows from weekly reporting muni bond funds for the week of Aug. 7, Lipper reported, down from $2.24 billion the previous week.
This marked the 11th consecutive week of net outflows from muni bond funds that report flows weekly and the lightest outflows since the week of July 3. For the year to date, muni bond funds have seen outflows of $18.1 billion.
The primary market dominated a mostly steady week for munis. Investors regarded the week’s large deals with varying degrees of enthusiasm. Puerto Rico Electric Power Authority arrived upsized and met strong demand. Investors also bought up almost $870 million of Washington general obligation bonds.
Bonds from Chicago O’Hare International Airport arrived much cheaper than traders anticipated, but were well-received. A large South Carolina Public Service Authority deal was downsized. Saginaw County, Mich., postponed its $60 million taxable pension bond deal.
The primary eclipsed the secondary market for much of the week, traders said.
Muni yields past the intermediate part of the curve rose modestly on the week. The 10-year triple-A yield ended the week steady at 2.72%. The two-year remained at 0.43% since Monday. The 30-year climbed three basis points to 4.28% over the span.
As Treasury yields past the front end of the curve fell by as much as nine basis points on the week, muni ratios to them rose modestly. The 10-year inched up to 105%. The two-year held at 139%, while the 30-year rose to 118%.
Assets for all muni funds that report their flows weekly decreased to $293.2 billion, a fourth consecutive week of decline. The previous week they reported $296.6 billion.
The value of the holdings for weekly reporting funds plunged $1.12 billion. The week before, they rose $1.50 billion.
The four-week moving average for all municipal bond mutual funds that report their flows weekly was $1.50 billion of outflows, compared with $1.56 billion of outflows the week before.
Long-term muni bond mutual funds that report flows weekly saw outflows of $880 million, the 23rd straight week of outflows.
The previous week, $1.69 billion left long-term muni bond funds. This year, $16.5 billion has left long bond funds.
High-yield muni bond funds that report flows weekly saw outflows for the 11th time in 12 weeks, at $209 million. The previous week, they reported $580 million in outflows. Assets for high-yield funds that report their flows weekly fell to $37.46 billion, from $37.92 billion the week before. Roughly $4.2 billion has left high-yield bond funds so far in 2013.
The value of the holdings for high-yield funds fell by $253 million. Last week, they rose by $251 million.
The four-week moving average for all high-yield municipal bond funds that report their flows weekly showed $317 million of outflows, from $316 million of outflows the week before.