Buy side

SAN FRANCISCO - Long-term municipal bond issuance dropped 4.1% in the first half of 2008, as issuers with auction-rate securities rushed to refinance and most others tried to avoid a turbulent market.

Weekly reporting municipal bond mutual funds had a net inflow of $461 million during the period ending June 25, AMG Data Services reported.

As the municipal market closes the book on the first half of 2008 and prepares for the start of the summer reinvestment season tomorrow, activity in the primary market will slow as underwriters, investors, and issuers cut the week short ahead of Friday's July 4th holiday.

Most of The Bond Buyer's weekly yield indexes rose last week, as municipal bonds cheapened significantly compared to Treasuries.

Outflows to the tune of $3.81 billion caused tax-exempt money market funds to end the week of June 23 with $513.65 billion, according to the Money Fund Report, a service of iMoneyNet.com of Westborough, Mass.

The ongoing credit crunch is starting to hit mutual funds, according to a recent review by Standard & Poor's that revised credit quality ratings on eight tax-exempt mutual funds.

Broker-dealers ended the first quarter of 2008 with 31.7% more in municipal debt on their books than they had at the end of 2007, according to Federal Reserve flow of funds data that is likely due to the freeze in the auction-rate securities market.

Weekly reporting municipal bond mutual funds had a net inflow of $374 million during the period ending June 18, AMG Data Services reported.

A $1.5 billion California general obligation sale and a trio of mammoth note deals will headline this week's activity in the primary market amid an estimated $6.46 billion in new-issue volume. Last week, the market welcomed a revised $7.28 billion, according to Thomson Reuters.

Most of The Bond Buyer's weekly yield indexes rose this week, as a number of large issues weighed on the market.

Tax-exempt money market funds managed to continue their upward growth for the week ending June 16, though they saw significantly lower inflows than last week, according to the Money Fund Report, a service of iMoneyNet.com of Westborough, Conn.

Weekly reporting municipal bond mutual funds had a net inflow of $695 million during the period ending June 11, AMG Data Services reported.

Retail investors and money market funds will be targeted by underwriters preparing to price some of the largest offerings during a week that expects to see $7.9 billion of estimated new-issue volume in the long-term market and a note deal of up to $2 billion in the short-term market.

Most of The Bond Buyer's weekly yield indexes rose this week, as losses in the municipal market outweighed gains.

Following a one-week blip of outflows last week, tax-free money market funds returned to positive territory for the week ending June 9, according to the Money Fund Report, a service of iMoneyNet.com of Westborough, Mass.

A Texas issuer and a New York issuer will share the primary market spotlight this week, with a handful of deals from diverse sectors - including energy, tobacco, and airports - though the activity will arrive amid relatively light overall volume.

Weekly reporting municipal bond mutual funds had a net inflow of $693 million during the period ending June 4, AMG Data Services reported.

After four straight weeks of significant inflow activity and record-high asset levels, municipal bond money market funds experienced outflows in the week ending June 2, according to the Money Fund Report, a service of iMoneyNet.com of Westborough, Mass.

Most of The Bond Buyer's weekly yield indexes declined this week, as gains from an early-week rally barely withstood a sell-off yesterday.

As a means of exiting the auction-rate securities market and seeking new alternatives for cost-efficient leverage, a handful of municipal closed-end funds are in the midst of launching new floating-rate products or relying on traditional tender-option bond programs to redeem their outstanding auction-rate preferred shares.