Buy side

Large issues from Illinois and New York lead the new-issuance charge in the municipal market this week. Total potential volume is expected to climb to $8.14 billion this week.

Municipal market participants are praising rules finalized by the Commodity Futures Trading Commission that except most state and local governments from having to clear interest rate swaps through a derivatives clearing organization.

The municipal market has been fairly energized this week by the simple economics of supply and demand.

In a stunning reversal of recent patterns, tax-exempt money market funds amassed $4.64 billion of new cash as total net assets soared to $274.7 billion in the week ended July 9.

The market continued to show its confidence in municipal bond mutual funds with strong inflows following a holiday week of relative inactivity.

Nearly three-quarters of the tobacco settlement bonds rated by Moody's Investors Service will default if smokers keep up their current pace of kicking or cutting back on their habit, the agency warns in a new report.

With an eye toward expansion, Memphis-based FTN Financial Capital Markets recently brought on six new traders and sales professionals for its muni division.

One analyst is finding opportunity in the intermediate part of the yield curve – where the risk is modest and the rewards are the greatest compared to the short and long ends of the curve, and is also recommending the municipal market overall as a safe alternative at a time of shifting investor sentiment.

Lawmakers and financial market participants sparred over the economic and business impact of the Dodd-Frank Bill and the so-called Volcker Rule, as well as fallout from potential new money market rules.

Top Illinois finance officials are on the road to sell institutional investors on the tidy structure of the state's sale issue next week of $1.5 billion of double-A rated unemployment bonds that are insulated against the state's well-publicized liquidity and budget struggles.

After falling from August 2009 to February 2012, local government employment may finally have turned a corner in the last four months.

The wave of mergers sweeping across the non profit health care sector the past two years is a positive trend for hospitals as well as for investors who like to buy hospital bonds, Fitch Ratings said in a new comment.

A tightening of municipal bond yields in various pockets of the secondary market highlighted an otherwise quiet trading session Monday.

If allegations that banks manipulated Libor prove to be true, those actions likely cost municipal bond issuers with swaps linked to the rate tens of millions of dollars, according to experts.

Primary issuance in the municipal market should return to pre-holiday levels this week following its seasonal holiday volume slide. Industry estimates anticipate $7.07 billion reaching the market.

The law firm taps a former key operative for the Dormitory Authority of the State of New York, perennially a top issuer.

With negligible primary volume, meager activity in the secondary and thinned trading desks, the Fourth of July holiday put the municipal market on ice this week. Muni bond indexes mostly fell, reflecting a slight fall in triple-A yields.

The holiday week slowed the tax-exempt market down to a crawl, but investors still invested in municipal bond mutual funds. Those funds that report their flows weekly saw $317 million of inflows for the week ended July 4.

Municipal issuers back the Municipal Securities Rulemaking Board's proposal to require dealers to discontinue temporarily masking the exact par value of large muni bond trades on EMMA, while dealer and institutional investor groups oppose it.