Buy side

Investors last week withdrew the most cash from municipal bond money-market funds since April as minuscule returns continued to chase unparalleled sums of money out of the industry.

Municipalities borrowing short term are increasingly taking on "refinancing risk" - a risk that used to fall on the investor, according to a Fitch Ratings report released yesterday.

Municipal bond sales are set to pick up this week following an unusually light slate of offerings last week.

The six-month torrent of cash into municipal bond mutual funds pushed the industry to its most bountiful level of assets under management ever last week, according to AMG Data Services.

Most of The Bond Buyer’s weekly yield indexes declined this week as municipals mainly showed gains in the sessions following the three-day holiday weekend.

To understand how vulnerable municipal bonds are to inflation, consider this: the triple-A 10-year is the same price it was six months ago, and by one measure almost 100 basis points weaker.

The exodus of cash from municipal money-market funds took a breather last week.

Municipal bond mutual funds just missed setting the record for assets under management last week as a tempered appetite for risk slowed the river of cash inundating the industry.

With most of the municipal market still in holiday mode this week, the short-term market will dominate the official first full week of the third quarter with a planned $700 million note sale from the New York State Thruway Authority.

Most of The Bond Buyer's weekly yield indexes increased this week, despite tax-exempt yields declining slightly in the majority of the week's sessions and the market carrying an overall firmer tone.

Tax-exempt money market funds closed the second quarter with outflows of $3.87 billion, which caused total assets to settle at $456.11 billion for the week ending June 29, according to the Money Fund Report, a service of iMoneyNet.com.

Municipal bond mutual funds, it seems, can do no wrong.

After accommodating some heavy June volume, the municipal market could see its first dose of summer doldrums this week as a pair of airport revenue offerings are priced amid a relatively light calendar, estimated at $1.97 billion, of primary market offerings ahead of the July 4 holiday, according to Ipreo LLC and The Bond Buyer.

Nearly all of The Bond Buyer’s weekly yield indexes declined this week, as the market firmed up in most of the week’s sessions.

Outflows among tax-exempt money market funds increased to $3.03 billion for the week ending June 22, as total assets fell to $459.98 billion, according to the Money Fund Report, a service of iMoneyNet.com.

When asked why anybody would buy a corporate bond now that a taxable municipal bond alternative is available, Peter Coffin offered an inspired answer: “I don’t know.”

Legislation authorizing the U.S. Food and Drug Administration to regulate cigarettes beat back a rally in tobacco bonds this month.

The 10-year muni-Treasury ratio is back to normal. Whether it will stay there is debatable.

The torrential downpour of cash upon municipal bond mutual funds has eased to mere rainfall.

The municipal market this week will again see a generous slate of new issues, led by $800 million of personal income tax revenue bonds from the Dormitory Authority of the State of New York in the long-term market and $500 million of Idaho tax anticipation notes in the short-term market.