Buy side

With the end of 2008 just a few weeks away and 30-day visible supply hovering around $17 billion, only a handful of issuers are expected to make their way to the primary market this week.

Money continued to drain out of municipal bond mutual funds last week - albeit at a slower pace - as the financial crisis continued, chasing capital into safe havens.

Nearly all The Bond Buyer's weekly yield indexes climbed this week, as tax-exempt yields grew weaker in all the week's sessions.

Tax-exempt money market fund assets took a slight dip for the week ending Dec. 1, losing $500.2 million and settling at $493.58 billion after climbing $1.61 billion and reaching $494.08 billion the previous week, according to the Money Fund Report, a service of iMoneyNet.com of Westborough, Mass.

The municipal bond market is entering a critical phase as local governments hope a still-skittish market can digest a near-record volume of new bonds over the next 30 days.

Pacific Investment Management Co. froze dividends yesterday on six municipal bond funds because the value of their investments is insufficient to cover the funds' debt.

It used to be that a good stretch for Treasuries probably also meant a good stretch for municipal bonds. No longer.

Pacific Investment Management Co. may freeze the dividend on the Pimco California Municipal Income Fund II because the value of its investments are insufficient to cover its debt.

Tax-exempt money market funds saw inflows of $1.61 billion for the week ending Nov. 24 and reached $494.08 billion in total assets, according to the Money Fund Report, a service of iMoneyNet.com of Westborough, Mass.

Compared to last week's lull in new-issue volume ahead of the Thanksgiving holiday, this week investors will have plenty of deals to choose from - including a handful of some of the most sizable offerings that the otherwise relatively lackluster primary market has seen in recent months.

Most of The Bond Buyer's weekly yield indexes pushed higher this week, as tax-exempts grew weaker in all the week's sessions despite light to moderate activity and Treasury market gains.

There will be few deals in the primary market for investors to digest this week as many issues will be put on hold until after the Thanksgiving holiday. The result will be a drop in volume to an estimated $2.25 billion after reaching as high as $5.09 billion last week - the strongest in several weeks after supply gradually inched its way up amid the nation's ongoing fiscal recovery effort, according to data from Thomson Reuters.

Withdrawals from municipal bond mutual funds accelerated last week as the financial crisis sapped demand for almost every investment except Treasuries.

Nearly all The Bond Buyer's weekly yield indexes were somewhat lower this week on the whole, as municipals showed gains but lagged behind a massive Treasury rally.

After a one-week blip that showed some positive growth last week - following two prior weeks of outflow activity - tax-exempt money market funds returned to negative territory, losing $4.11 billion and settling with total assets of $492.47 billion for the week ending Nov. 17, according to the Money Fund Report.

Municipal bond exchange- traded funds have suffered a baptism by fire in their first year of existence.

A pair of deals from issuers in Massachusetts and California will headline this week's primary market, where an estimated $4.32 billion is expected to offer the largest - and most notable - increase in new-issue volume since the recent economic turmoil that put the municipal market in a deep freeze over the last six to eight weeks.

The exodus of cash from municipal bond mutual funds appeared to slow last week.

The Bond Buyer's weekly yield indexes declined this week, as tax-exempt yields fell in each of the holiday-shortened week's sessions.

With November well under way and the presidential election over, tax-free mutual funds saw inflows for the week ended Nov. 10, drawing in $1.59 billion and ending the week with $496.58 billion in total assets, according to the Money Fund Report.