Article: United States: Muni Credit Spreads Widen to 2-Month High on Weaker Fund Flows.

Byline: manish03

Relative borrowing costs for lower- rated states and municipalities rose to the highest in two months as buyers pulled back from high-yield funds amid concerns the economic recovery may falter.

The gap between yields on AAA and BBB tax-exempt bonds widened to 248 basis points, or 2.48 percentage points, the highest since Sept. 7, Merrill Lynch indexes show. The four-week moving average for investor cash flows into funds that buy higher-yielding municipals fell below $50 million for the first time in more than six months, according to data cited by JPMorgan Chase & Co. on Nov. 6.

Municipal bonds may be headed for declines as they ...

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