Buy side

Defense Secretary Leon Panetta's confirmation that new rounds of military base closures would not happen in 2013 benefits privatized military housing as a credit, rating analysts say.

New York State Comptroller Thomas DiNapoli announced the appointment of Vicki Fuller as the new chief investment officer for the $150.3 billion New York State Common Retirement Fund.

The municipal market, sliding leisurely through its slow season, anticipates a slight uptick in issuance the week of Aug. 6. Industry estimates hold that muni bonds expected to be sold during the week should total $6.35 billion, versus a revised $5.93 billion last week. Then, the market waded through a sluggish week in the primary and secondary that did little to yields, which continue to hover near record lows.

State governments have had a major role in how municipalities deal with fiscal distress, says HJ Sims director of credit analysis Richard Larkin.

Stockton, Calif., is proposing to temporarily cut personnel costs by 6.6% while permanently cutting payments on the Assured-insured pension obligation bonds by 83%, the company said.

Flows to municipal bond mutual funds fell this week, but they still remain positive. The market saw a sluggish week of mostly stagnant yields and mixed interest for product in the primary and secondary markets. Muni bond funds reported almost $504 million of inflows from funds that report their flows weekly for the week ended Aug. 1, according to Lipper FMI. They have seen inflows for 16 consecutive weeks.

A sluggish municipal market failed to gain any momentum this week. But although muni yields underperformed those of Treasuries, they only weakened by an incremental factor in the belly of the curve. They remain near record lows across the curve. Muni indexes were higher on the week beyond the short end of the curve, which reached its lowest point in the 23 years it has been tracked.

Moody's Investors Service has put bond insurer Syncora Guarantee on review for an upgrade from Ca. This is due to Syncora receiving a $375 million settlement from Bank of America.

A New York court has ruled that bond insurer ACA must pay claims on defaulted bonds that it insured.

Municipal bond analysts are in demand. With triple-A yields diving into record low territory, fund managers are being forced to look harder to find yield.

The financial health of state housing finance agencies is mixed, Fitch Ratings reported Tuesday.

Long-term municipal bond issuance for 2012 continues to outpace that of the previous year. But the once-yawning gap year-over-year has narrowed. Issuers floated just 7% more in total volume last month than they did in July 2011. That amounted to $26.6 billion on 836 issues in July 2012, against $24.9 billion on 757 deals over the same period last year.

The Triboro Bridge and Tunnel Authority of New York should bring a hefty deal to the municipal marketplace this week. Municipal market volume should climb this week, albeit barely, and from modest levels.

Moody's Investors Service raised its rating one notch to A2 on $160 million of Alexian Brothers Health System's still outstanding after its acquisition by Ascension Health Alliance.

Standard & Poor's and Moody's Investors Service have mixed outlooks on the higher education sector.

Puerto Rico's debt load, exceeding $60 billion, and pension liabilities are a challenge to the island's fiscal ability and investors should limit their exposure, cautions Alan Schankel of Janney Capital Markets.

The municipal market continues to gain from an extended rally that has boosted fixed income securities. Investors have embraced bonds as they see volatile equities and want security, if not yield.

The tide of investor demand stays high for municipal bond mutual funds. A strong week of record-low muni bond yields on the intermediate and long ends of the curve marked the week ended July 25.

Although the total net assets of tax-exempt money market funds fell noticeably less than last week, the outflows continue to erode the more than $4 billion bounty that the funds generated just two weeks ago, according to The Money Fund Report, a service of iMoneyNet.com.