Buy side

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.

Rhode Island's Investment Commission on Wednesday chose BNY Mellon as its custodian bank for the state's assets of roughly $8 billion, General Treasurer Gina Raimondo announced.

Fitch Ratings has dropped 26 U.S. municipal bonds supported by three major Japanese banks.

Stockton, Calif. asked bondholders and bond insurers to take major hits during the mediation process that preceded the city's Chapter 9 bankruptcy filing.

If municipal bond market observers feel there are other time bombs out there waiting to detonate that resemble the accusations surrounding the manipulation of Libor, they won't be found in variable-rate debt tied to the SIFMA municipal swap index.

The municipal market expects a dip in supply for the primary this week

Fitch Ratings is preparing to possibly drop nearly all of its charter school ratings.

Excerpts from "Investing in the High-Yield Municipal Market," by Triet Nguyen:

Credit matters. That is the crux of the newly-released book, "Investing in the High-Yield Municipal Market," written by Triet Nguyen, a 30-year veteran of the fixed-income market who used his years of experience in research and trading within the complex segment of the industry as a springboard for the 254-page publication.

A new 3.8% tax on investment income that's part of the federal health care overhaul will boost demand for tax-free municipal bonds starting next year, say some market experts.

Largely stable rates highlighted a subdued municipal market this week.