Investments

All The Bond Buyer’s long-term weekly yield indexes declined this week in the wake of Friday’s rally, during three lightly traded sessions in advance of the upcoming Christmas closure.

The tax-free money market fund industry continues to shrink rapidly, squeezing what had been a major source of short-term credit for municipalities and arguably leading to higher borrowing costs for state and local governments.

MASSACHUSETTSLawrence (City)Dec 21, 2010 . . . . . . $3,362,450

ALABAMATuscaloosa County Industrial Development AuthorityDec 21, 2010 . . . . . . $50,000,000

Municipal credit analysts are spending more time evaluating a risk few used to give much thought to: a municipality's loss of market access for refinancing short-term debt.

ARKANSASFouke School District No. 15 of Miller CountyDec 20, 2010 . . . . . . $660,000

DISTRICT OF COLUMBIADistrict of ColumbiaDec 17, 2010 . . . . . . $26,000,000

Table as of: 12/17/2010 12:58 PM Invisible Supply Issuer and purpose Amount* Approval

MASSACHUSETTSSaugus (Town)Dec 17, 2010 . . . . . . $2,548,000

ARIZONAPima County Metropolitan Domestic Water Improvement DistrictDec 16, 2010 . . . . . . $6,630,000

Investors continued to ferry cash out of their municipal bond mutual funds at historic rates last week as a tumultuous sell-off sowed fear among buyers.

The flood of new supply that has inundated the municipal bond market the past month will die out this week as issuers take a breather from selling new debt.

INDIANAClark CountyDec 16, 2010 . . . . . . $1,450,000

ALABAMAPerry CountyDec 13, 2010 . . . . . . $4,500,000

The Bond Buyer’s weekly yield indexes increased this week, due largely to substantial weakness on Monday and Tuesday.

Tax-exempt money market funds lost a sizable $2.09 billion, dropping total net assets to $326.88 billion for the week ending Dec. 13 and erasing nearly all gains from the previous week, according to the Money Fund Report, a service of iMoneyNet.com.

CALIFORNIASan Francisco (City and County) Public Utilities CommissionDec 15, 2010 . . . . . . $180,960,000

ALABAMALincoln (City)Dec 14, 2010 . . . . . . $6,030,000

The municipal market has become so turbulent and illiquid that even investors who find tax-exempt yields appealing are sitting on their hands. The recent rout in tax-exempt bonds has some portfolio managers, investors, and dealers beginning to sniff at yield levels that could invite buyers back into the market.

INDIANAFulton CountyDec 14, 2010 . . . . . . $1,600,000