Public finance

Municipal bond mutual funds saw outflows for a second straight week, at $133 million, as the market absorbed a large calendar with concessions.

The Senate Budget Committee Democrats' budget resolution for fiscal year 2014 suggests the possibility of percentage or dollar caps on tax preferences such as tax-exempt muni bond interest, pushes traditional tax-credit bonds for transportation, and proposes a $10 billion infrastructure bank to provide loans and loan guarantees for projects.

Tax-exempt money market funds lost $2.17 billion and total net assets settled at $276.62 billion in the week ended March 11.

Some market participants believe the recent outflows from municipal bond mutual funds could be a sign of the "great muni rotation," while others believe such a rotation is unlikely to occur anytime soon.

INDIANA

ALABAMA

Table as of: 03/13/2013 11:35 AM Invisible Supply Issuer and purpose Amount

The municipal bond market is weakening by slow accretion. A second day of California GOs and Empire State Development Corporation paper have kept market participants busy and pushed up yields incrementally

The municipal market started Wednesday morning slightly weaker in tone as dealers worked to unload some of their balances.

Just because the household sector saw a material decline in its holdings at year end, it didn't mean the retail crowd snubbed its nose at municipal securities altogether — it just shifted its access to the debt.

Six weeks after pulling its last bond sale, Illinois plans a full court press with investors and will drop a bidding feature that had dampened the interest of some broker-dealers as it prepares to competitively sell $800 million of debt.

Table as of: 03/12/2013 13:56 PM Invisible Supply Issuer and purpose Amount

ARKANSAS

ALABAMA

The Chicago City Council will take up ordinances as soon as Wednesday authorizing up to $1.65 billion of O'Hare International Airport debt that will raise new money for the airport's $8 billion expansion.

Changes to the tax code capping the tax exemption of municipal bonds would increase borrowing costs for public power providers of all sizes, according to a new report from the American Public Power Association.

Fewer governors have been focusing on pension reform in their state of the state addresses this year, but most who propose reform follow through, according to Loop Capital Markets.

Many prominent, heavily leveraged municipal bond closed-end funds saw sharp declines to their NAVs late last week thanks to seasonal factors, such as lighter cash flows, heavier supply and lower demand, mixed in with the approaching tax season.

Three Standard and Poor's analysts speaking in the wake of federal sequestration cuts said that public power utilities, water and sewer entities, and the transportation sector should all remain fairly stable for the next year despite a number of pressures.

ILLINOIS