By Yali N’Diaye
WASHINGTON (MNI) – Data released Wednesday by the Investment
Company Institute showed redemptions continued for long-term municipal
bond funds in the week-ended January 26.
Estimated flows showed, however, that outflows from muni funds
slowed compared with the previous week.
While taxable bond funds took in $3.5 billion in the January 26
week, slightly more than $3.6 billion the previous week, investors
continued to exit municipal bond funds — which had estimated outfows of
$2.7 billion.
Muni bond funds had already experienced a $5.7 billion outflow in
the January 19 week.
Since the beginning of January, muni bond funds outflows have
totaled nearly $13 billion. And this is on the back of outflows of $13.4
billion in December and $7.7 billion in November.
State and local governments budget woes continue to make the
headlines, while public officials continue trying to reassure investors
— most of them retail — that measures are being taken to tackle the
financial problems.
The data from the latest week show investors’ fears were directly
linked to muni developments, as all other categories of long-term bond
funds experienced inflows.
Equities took in $5.1 billion in the Jauary 26 week, hybrid funds
took in $1.9 billion and overall bond funds took in $0.8 billion.
Citigroup recently conducted a survey on conditions in the Muni
market. Some of the result highlights included 50% of clients view weak
bond fund flows as biggest threat to tax-exempts, 60.5% do not expect
BABs to be renewed, almost 70% are overweight essential service revenue
bonds and over 50% are underweight local general obligation bonds.
Additionally, the survey found almost 75% believe pressure on muni
yields will come from a shift to higher longer-term yields and 45% do
not expect problems with European peripherals to spill over to munis.
** Market News International Washington Bureau: 202-371-2121 **
[TOPICS: MNUEQ$,M$U$$$,M$$FI$,MFU$$$]
