Pall over muni market slowly lifting

Investors withdrew about $1.2 billion from U.S. municipal-bond mutual funds this week, the 13th-straight period of withdrawals, Lipper US Fund Flows said. Outflows have totaled $24.8 billion since mid-November, according to data released yesterday by Lipper, a Denver-based research company. The $1.1 billion that investors took out in the week ended Feb. 2 was the least in two months, Lipper said. “Outflows are beginning to subside,” said Justin Hoogendoorn, director of capital markets at BMO Capital Markets in Chicago. Investors pulled $4 billion in the week ended Jan. 19, the most since Lipper started compiling data in 1992. Some investors exited the $2.86 trillion municipal debt market amid a prediction of municipal defaults amounting to “hundreds of billions of dollars” by Meredith Whitney, an analyst who correctly projected Citigroup Inc.'s dividend cut two years ago. She spoke Dec. 19 on CBS Corp.'s “60 Minutes.” In the wake of the national recession, 44 states face a combined $125 billion of budget deficits next fiscal year, according to a study by the Washington-based Center on Budget and Policy Priorities, a nonprofit group focused on issues affecting lower-income Americans. --Bloomberg News--