Buy side

Executives from Fitch Ratings responded to issuer concerns, saying their agency does not require municipal bond issuers to sign indemnity agreements releasing Fitch from liabilities resulting from ratings.

Fitch Ratings has downgraded more than a dozen tender-option bond issues and variable-rate demand obligations.

Municipal bond exchange-traded funds have enjoyed rapid growth since their introduction in September 2007.

The hunt is on for yield in the municipal market as interest rates continue to hover around historical lows, forcing investors to use varying strategies to boost returns.

Municipal bond issuers have assembled a whale of a calendar for this week, with just over $12 billion slated to come to market, nearly double last week’s $6.35 billion total.

Municipal bond yields in the short and intermediate parts of the curve rose sharply this week.

The tax-exempt market may have experienced a sizable backup in yields on the week, but muni bond mutual funds still saw robust inflows.

June arrived on a positive note for tax-exempt money market funds, which accumulated $1.19 billion in new cash while total net assets rose to $273.64 billion in the week ended June 4, according to the Money Fund Report, a service of iMoneyNet.com.

A decline in the number of U.S. bank and thrift consolidations in 2012 is a credit positive for municipal bonds, Moody's Investors Service said.

Analysts and portfolio managers say there is opportunity in paper from Puerto Rico and California, two places struggling with challenges that range from closing budget gaps and controlling spending to legislative hurdles and pension issues.

Volume in the tax-exempt market should jump back to pre-holiday levels this week, despite several days of municipal bond underperformance in the face of a powerful rally in Treasuries.

Municipal bond expert Robert Doty says the risk of default for municipal bonds is concentrated in those that are dependent on private profit or nonprofit institutions’ performance.

Concerns about the euro zone hit Treasury yields a lot harder than any other factor moved their muni cousins. Municipal bond yields have fallen modestly on the week on the intermediate and long ends of the curve.

Municipal bond mutual funds saw inflows during a holiday-shortened week and amid markedly outperforming Treasuries

Tax-exempt money market funds gave up last week’s short-lived cash flow as outflows of $1.80 billion dropped total net assets to $272.46 billion in the week ended May 28, according to the Money Fund Report, a service of iMoneyNet.com.

The Municipal Securities Rulemaking Board has launched an online guide designed to help retail investors better understand the municipal bond market and the roles and responsibilities of muni bond brokers.

Spring is in the air — and for muni investors that means the hunt is on to replace paper that will mature in June and July when more than $70 billion in coupon payments and proceeds from called and maturing bonds hits their accounts.

The two-day surge of new issuance this week did not sink the municipal bond market in a holiday-shortened week.

Tax-exempt money market funds retrieved some of the losses they suffered last week, as $1.47 billion of new cash flowed in and total net assets rose to $274.26 billion in the week ended May 21, according to the Money Fund Report, a service of iMoneyNet.com.

A great upsurge in new issuance could not deter investors from allocating money into municipal bond mutual funds.