Investments

Municipal bond mutual funds coughed up more cash last week as investors continue to take their money out of state and local government debt funds at a record pace.

WASHINGTON — The Internal Revenue Service is auditing $130.96 million of consolidated revenue bonds issued in September 2002 by the Board of Regents of the University of Houston System to finance the acquisition, construction, and renovation of facilities.

NEW YORKDelhi VillageDec 29, 2010 . . . . . . $3,169,000

CALIFORNIACalifornia Pollution Control Financing AuthorityDec 22, 2010 . . . . . . $4,850,000

Tax-free money market funds commanded new money from investors last week — the second straight week of inflows — possibly marking an ebb, or at least a slowdown, to the rush of cash away from money funds the past two years.

Holiday doldrums coupled with a Sunday blizzard that buried much of the Northeast conspired to keep the secondary market very quiet.

Table as of: 12/28/2010 13:32 PM Invisible Supply Issuer and purpose Amount* Approval

PENNSYLVANIAYork County Industrial Development AuthorityDec 27, 2010 . . . . . . $3,400,000

MFS Investment Management's Municipal High Income Fund is a gem of consistency. In late December 2010, it was sporting a 4.57% year-to-date return — good enough to lead the average performance of its peers by three-quarters of a percentage point.

Standard & Poor's raised its long-term and underlying ratings on Indiana University to AA-plus from AA.

MISSISSIPPIMississippi Development BankDec 21, 2010 . . . . . . $10,395,000

Alabama federal Judge Keith Watkins accepted a settlement Monday ending a two-year-old lawsuit involving swaptions between the Alabama Public School and College Authority and JPMorgan.

Record municipal bond mutual fund redemptions have emerged as a threat to the rally most market participants expected to kick off early next year, as the anticipated slowdown in the supply of new bonds is met with a wave of selling by mutual funds.

The Kansas Board of Regents will seek a $50 million increase in state aid to higher education in fiscal 2012 to restore some of the money lost to budget cuts over the past two years.

CALIFORNIAABAG Finance Authority For Nonprofit CorporationsDec 23, 2010 . . . . . . $3,855,000

CHICAGO — The Illinois Institute of Technology is in danger of losing its investment-grade level rating from Moody’s Investors Service as it struggles with operating deficits that have forced draws on its endowment and bank lines to cover debt service and other obligations.

The municipal bond market will be asked to digest a single small deal this week as a welcome lull in new supply continues through the holidays.

Moody’s Investors Service last week downgraded $1.4 billion of Maine Health and Higher Educational Facilities Authority reserve fund bonds to A1 from Aa3 due to a new rating methodology for pooled debt programs.

INDIANAHighland (Town)Dec 22, 2010 . . . . . . $2,950,000

CALIFORNIAABAG Finance Authority For Nonprofit CorporationsDec 22, 2010 . . . . . . $7,000,000