Buy side

The stream of money flowing into municipal bond mutual funds picked up a little last week, but investors continue to cash out of short-term funds even past tax season.

Nearly all of The Bond Buyer’s weekly yield indexes declined this week amid a light new-issue calendar and somewhat lackadaisical interest in the secondary.

Tax-exempt money market fund outflows ebbed by nearly $1 billion this week, but still saw $4.44 billion pour out of the market as funds settled with $358.65 billion in total assets for the week ending April 26, according to the Money Fund Report, a service of iMoneyNet.com.

California’s general obligation bonds have caught fire since Moody’s Investors Service and Fitch Ratings slapped higher ratings on the state’s credit earlier this month.

Wherever the money’s going, it’s not going to municipal bond mutual funds.

Volume will be noticeably lighter and smaller-sized offerings will take the spotlight this week in lieu of the meatier deals that have dominated primary activity recently.

WASHINGTON — The Financial Industry Regulatory Authority announced yesterday that it has fined HSBC Securities Inc. $1.5 million and U.S. Bancorp Investments Inc. $275,000 to settle sales-practice violations for municipal and other auction-rate securities the firms sold to retail customers.

All of The Bond Buyer’s weekly yield indexes on long-term debt declined this week, as municipals firmed up in nearly every session.

Tax-exempt money market funds posted the second-largest outflows of the year — and more than doubled last week’s losses — as the total invested fell $5.42 billion to $363.09 billion in net assets for the week ending April 19, according to the Money Fund Report, a service of iMoneyNet.com.

Many of the biggest property and casualty insurers have been paring their holdings of municipal bonds to shield themselves from exposure to troubled state and local government credit.

Moody’s Investors Service kicked off a wide-scale “upward shift” in municipal credit ratings yesterday, assigning stronger grades to 34 states and Puerto Rico.

Two large state general obligation deals consisting of taxable Build America Bonds are headed to the market this week amid an estimated $5.58 billion in total new volume, according to Ipreo LLC and The Bond Buyer.

Investors withdrew more cash from municipal bond mutual funds than they invested last week for the second time in less than a month, possibly heralding the end of the tidal wave of money that has washed over the industry for more than a year.

Nearly all The Bond Buyer’s weekly yield indexes declined this week, as the municipal market rebounded from last week’s losses.

Reversing the gains they accumulated last week, tax-exempt funds were hit with outflows of $2.10 billion and finished with total net assets of $368.51 billion for the week ending April 12, according to the Money Fund Report, a service of iMoneyNet.com.

Anyone studying the path of yields on double-A or triple-A rated municipal bonds over time might want to put a little asterisk next to April 2010.

Many of the biggest institutions that own municipal bonds beefed up their holdings last year as state and local government debt became something of a preferred asset.

Investors once again entrusted money to municipal bond mutual funds last week after briefly withdrawing money for the first time in well over a year.

Chicago will come to market with a $1.04 billion offering of revenue bonds this week on behalf of Chicago O'Hare International Airport, leading roughly $6.7 billion in expected new issuance, according to Ipreo LLC and The Bond Buyer.

Municipal closed-end funds continue to surge to new peaks despite the specter of higher interest rates threatening to throw a wet blanket on all the fun.