Muni bond funds see $411 million outflow, fourth weekly cash loss

By Paul Deckelman

New York, Sept. 17 – Municipal bond funds, a measure of liquidity in the U.S. municipal bond market, saw a net outflow of $411.07 million during the week ended Wednesday, according to data released Thursday by the Lipper analytical services unit of Thomson Reuters Corp.

It was the fourth straight weekly cash loss for the funds and came on the heels of the $95.99 million decline reported last Thursday for the week ended Sept. 9. Before that had been outflows of $586.48 million for the week ended Sept. 2 and $344.56 million for the week ended Aug. 26.

That earlier setback had broken a two-week winning streak for the funds during which $57.74 million more had come into them than had left them – a $43.66 million inflow during the week ended Aug. 19 and a $11.09 million upturn for the week ended Aug. 12.

Those two inflows, in turn, had followed but only partially offset the $308 million outflow seen during the week ended Aug. 5, which was widely attributed to investor angst about Puerto Rico’s financial problems after the announcement the preceding weekend that the troubled U.S. island commonwealth, groaning under a debt load of $72 billion, had defaulted on obligations issued by its Public Finance Corp.

This week’s outflow is the 20th seen in the 37 weeks since the start of the year, versus 17 inflows.

While the muni funds began the year on a strong note, recording inflows over the first 12 weeks of 2015, they finally suffered their first cash loss of the year during the week ended April 1, an outflow of $300.6 million.

Things have been pretty much downhill since then, with just a handful of inflows adrift in a sea of outflows, including, at one point, an 11-week losing streak that ran through mid-July during which considerably more investor cash left those funds than came into them, according to a Prospect News analysis of the data.

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