Securitization

The recent firmness in the market has been "much appreciated," said Shannon Rinehart, senior portfolio manager of municipal debt at Columbia Threadneedle Investments.

The bonds have not reacted to the most recent negative ratings actions, although one buysider said that may soon change.

Muni yields remain attractive, said Tom Kozlik, managing director, head of public policy and municipal strategy at HilltopSecurities.

Most of the Maryland Proton Treatment Center's debt hasn't traded hands for years.

Focus was on the primary market last week, with Birch Creek reporting that one dealer estimated that 90% of the focus earlier in the week was on new issues.

"For munis, a strong jobs report should reverse recent credit spread widening, while a weak jobs report should keep credit spreads around current levels," said BofA strategists.

Part of the problem is lack of reimbursement from insurance companies, said the owner of one proton center.

Compensation played a role in the departures, sources said.

The well-known muni strategist said he's pursuing "more market-related opportunities."

Some of the issuance stems from project finance largely "drying up" because of where rates are, said Jennifer Johnston, senior vice president and director of research, municipal bonds, for Franklin Templeton Fixed Income. 

The market has seen seven consecutive weeks of outflows. "This is not surprising given that retail investors tend to follow performance," said Daryl Clements of AllianceBernstein.

"Easing tariffs, a slowing economy and an improved supply/demand outlook for munis in May and onward should drive muni market pricing going forward," BofA strategists said.

Investors pulled $397.4 million from municipal bond mutual funds in the week ended Wednesday, following $1.258 billion of outflows the prior week.

The escalating dispute between the prestigious issuer and the White House is spooking some bond holders and creating opportunities for others.

The market is still in a negative technical period, said Chris Eustance, a portfolio manager at Morgan Stanley Investment Management.

Muni yields may "continue to stay elevated due to supply and demand factors," rather than concerns over credit quality, said Cooper Howard, a fixed income strategist at Charles Schwab.

Monday saw a reversal from the past week as muni yields rose three to 10 basis points, depending on the curve. Despite this, Monday's losses were not enough to erase last week's gains as yields are still lower than they were two weeks ago.

Investors pulled $1.258 billion from municipal bond mutual funds in the week ending Wednesday, following $3.302 billion of outflows the prior week, according to LSEG Lipper data.

The Investment Company Institute reported larger outflows for the week ending April 9 of $3.714 billion, following $1.15 billion of outflows the previous week.

Citi's exit may have aggravated illiquidity last week, but even the traditional leader in times of stress wouldn't have been able to calm the wild market moves.