US municipal bonds still register more outflows than inflows

September 6
4:13 AM 2013

There is a continuous decline in the outflows from US municipal bonds, with numbers dropping below USD1.31 billion in the week ending September 4. On the other hand, the net outflows recorded amounted to USD1.74 billion in the week before according to data obtained from Lipper last Thursday.

This is the 15th consecutive week that outflows have been experienced. This kept the four week moving average negative at USD1.6 billion according to the Thomson Reuters unit. Also included in the Lipper report saw the outflows of high yield funds worth USD265.61 million and exchange traded funds also registered outflows from USD60.88 million.

The mass exodus from municipal bond funds stem from fears of hikes in interest rates as well as nervousness about credit risk. As a result, the outflows reached USD4.53 billion by June's end. Overall for 2013, only eleven weeks of inflows have been registered.

According to a special commentary made S&P Dow Jones indices last Thursday, "Puerto Rico continues to lead all states and territories downward. Uncertainty about when and if the needed economic turnaround will come has put selling pressure on bonds in the secondary market."

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