Buy side

Arbitration panels for the Financial Industry Regulatory Authority have ordered Citigroup to pay roughly $2.2 million to investors who lost money in one of the bank’s municipal bond arbitrage vehicles.

On the heels of last week’s robust calendar, volume will be noticeably lighter this week as only a handful of sizable deals deliver an estimated $4 billion to the municipal market amid abbreviated trading due to the observance of yesterday’s Memorial Day holiday, according to Ipreo LLC and The Bond Buyer.

Municipal bond mutual funds commanded a moderate sum of new money last week as investors remained averse to risk.

Tax-exempt money market funds saw outflows of $356.83 billion while the average, seven-day simple yield remained unchanged at 0.04% for the week ending May 24, according to the Money Fund Report, a service of iMoneyNet.com.

New Jersey Gov. Chris Christie earlier this week remarked that if the state didn’t clean up its act it could become the next Greece.

The Bond Buyer’s weekly yield indexes were narrowly mixed this week, lagging Treasury market losses.

Many investors will set their sights on Washington this week, where the pricing of $1.1 billion of taxable general obligation Build America Bonds is expected to be a record-setting event for both the state and the market — even though overall volume is expected to dip noticeably from last week.

The municipal universe continues to shrug off the panic enveloping financial markets across the world.

The Bond Buyer’s weekly yield indexes declined this week as the municipal market grew firmer, though it lagged a more substantial rally in the Treasury market.

Municipalities with floating-rate debt, especially those with lower bond ratings, are likely to face high costs to renew their liquidity facilities this year and next — if they can obtain them at all.

Tax-exempt money market funds lost about half of what they gained last week, dropping $283.8 million to $356.98 billion in total assets for the week ending May 17, according to the Money Fund Report, a service of iMoneyNet.com.

Issuers from the Northeast will take the spotlight as the New York City Transitional Finance Authority and Pennsylvania each plan to sell at least $1 billion this week in the heaviest calendar of municipal bond deals in more than a month.

Municipal bond mutual funds continued to garner cash last week despite the flight from risk that has driven most of the flows this month.

The Securities and Exchange Commission has accused the former manager of two Schroders Investment Management municipal bond mutual funds of tipping his family members about impending distress to the funds and urging them to sell their shares.

State Street Global Advisors and Nuveen Investments launched an exchange-traded fund tracking Build America Bonds yesterday as investment vehicles devoted to taxable municipal debt continue to proliferate.

Tax-exempt money market funds had inflows of $545.7 million and settled with $357.2 billion in total assets for the week ending May 10, while the average seven-day simple yield dropped one basis point to 0.03%, according to the Money Fund Report, a service of iMoneyNet.com.

Some municipal bonds have rallied significantly since Moody’s Investors Service and Fitch Ratings last month overhauled their systems for assigning ratings to state and local government credits — effectively upgrading almost the entire universe of muni bonds.

The Bond Buyer’s weekly yield indexes increased slightly this week amid muted interest in the secondary market.

Retail investors shrugged off the panic plaguing most of the world’s financial markets last week and poured more cash into municipal bond mutual funds.

The primary market is expected to include a handful of large deals that run the gamut from long-term, fixed-rate, tax-exempt offerings in various sectors to short-term, floating-rate, and taxable issues that are part of an estimated $7.56 billion of new volume anticipated for pricing this week, according to Ipreo LLC and The Bond Buyer.