Buy side

Hedge funds and cross-over investors are expected to devour Puerto Rico's junk-rated sale of general obligation bonds when the $3 billion deal thunders into the primary market, municipal observers said.

Municipal mutual funds reported inflows slowed to $99.48 million in the week ended March 5 from $247 million of inflows the week before. Assets of all weekly reporting municipal funds increased to $281.69 billion, up from $280.11 billion, Lipper FMI reported.

Bond Buyer indexes showed weakening in the week ending Feb. 27.

Some muni strategists are saying investors should look to intermediate and longer term bonds to mitigate interest rate risk, as rising prices for short-term bonds begin to outweigh the protection their maturities offer.

The total net assets of weekly reporting tax-exempt money market funds slipped to $268.64 billion after outflows of $683.2 million in the week ended March 3, according to The Money Fund Report, a service of iMoneyNet.com.

A $1.1 billion Texas Transportation Commission revenue offering and a $700 million New York City general obligation sale this week will pump some life into the lackluster new-issue market.

The governments of Los Angeles plan to issue $5.5 billion in debt over the next year, Los Angeles City Administrative Officer Miguel Santana told Los Angeles' 2nd Regional Investors Conference

Municipal mutual funds reported inflows slowed to $247 million in the week ended Feb. 26 from $320.04 million of inflows the week before.

Tax-exempt money market funds recaptured more than half of last week's loss as they gained $1.29 billion in new cash, boosting total net assets to $269.33 billion.

S&P raised its GO rating for Amherst, Mass., home of the University of Massachusetts, to AA-plus from AA, citing the town's strong budgetary performance.

After almost a decade of shrinking business and muddied prospects, the bond insurance industry ended 2013 having tackled at least one major milestone: get penetration back on the upswing.

State and local government revenue growth and expectations for higher interest rates last year were the main contributors to a 12.1% decrease in note issuance, municipal managers and analysts said.

Housing and development were growth sectors in the 2013 bond market as others fell sharply in the second half of the year.

New issue supply in the municipal market was down during 2013, largely driven by a major slowdown in refunding deals during the second half of the year.

The municipal market will see a small boost in issuance next week even as total volume remains low.

Puerto Rico bond yields rallied Wednesday and Thursday, in a sign of hope for a successful bond sale next month.

The weekly average yield to maturity of the Bond Buyer Municipal Bond Index, which is based on 40 long-term bond prices, was down one basis point this week, at 4.88% for the week ending Feb. 6.

Municipal mutual funds gained $320.03 million of new cash in the week ended Feb. 19, Lipper FMI reported.

Tax-exempt money market funds posted $2.08 billion of outflows, reducing total net assets to $268.04 billion in the week ended Feb. 17, according to The Money Fund Report, a service of iMoneyNet.com.

ETFs and mutual funds are well-positioned for rising interest rates because they have most of their fixed income holdings in short-term government bonds, according to Morningstar Inc.