Public finance

The sell-off over the past two weeks has brought municipal bond prices to levels that, apparently, are more acceptable to investors. Consequently, muni bond mutual funds saw inflows, after a week of outflows.

Reversing a five-week trend of outflows, tax-exempt money market funds gained $2.09 billion and finished the week ending Oct. 10 with $290.61 billion in total net assets, according to the Money Fund Report, a service of iMoneyNet.com.

Municipal bond yields ratcheted up more quickly the last three weeks than any other period in 2011. But instead of worrying the market, alienated investors are happy to see yields finally returning to attractive levels.

ARKANSASDardanelle School District No. 15 of Yell CountyOct 12, 2011 . . . . . . $6,995,000

ARKANSASPulaski County Public Facilities BoardOct 12, 2011 . . . . . . $5,655,000

U.S. public finance downgrades at Fitch Ratings in the second quarter were at their highest level in eight years, according to a recent new report from the agency.

ARKANSASBryant School District No. 25 of Saline CountyOct 11, 2011 . . . . . . $2,550,000

CALIFORNIACalifornia Infrastructure and Economic Development BankOct 11, 2011 . . . . . . $64,925,000

KENTUCKYMontgomery County School District Finance CorporationOct 7, 2011 . . . . . . $8,260,000

CALIFORNIAABAG Finance Authority For Nonprofit CorporationsOct 6, 2011 . . . . . . $62,200,000

Municipal bonds are at some of their cheapest levels, relative to Treasuries, in market history. The problem is, most muni buyers don't care.

The municipal market will see about $1 billion less in new issuance this week after struggling to digest last week's supply as yields rose across the curve, forcing some issuers to stay on the sidelines until yields fall again.

ILLINOISForest Preserve District of Kane CountyOct 6, 2011 . . . . . . $21,235,000

ALABAMAOneonta (City)Oct 6, 2011 . . . . . . $4,885,000

The volatility and uncertainty in the bond markets have caught up with the behavior of municipal bond fund investors. As a result, muni mutual funds saw outflows after four straight weeks of inflows.

Muni yields plummeted in the wake of the Federal Reserve's Sept. 21 monetary policy meeting, prodding issuers to tap the capital markets. With back-to-back weeks of $8 billion in new supply, rates are now jumping back up.

Although outflows from tax-free money market funds dipped below $1 billion mark this week, they continued to put a damper on the industry as investors withdrew $773.1 million and total net assets fell to $288.52 billion in the week ended Oct. 3, according to the Money Fund Report, a service of iMoneyNet.com.

ALASKAUniversity of AlaskaOct 5, 2011 . . . . . . $48,870,000

ALABAMALinden (City)Oct 5, 2011 . . . . . . $1,705,000

Table as of: 10/04/2011 10:03 AM Invisible Supply Issuer and purpose Amount