(Bloomberg News) Investors withdrew about $974 million from U.S. municipal-bond mutual funds last week, the 14th-straight period of withdrawals, according to Lipper US Fund Flows.

The redemptions were the least that investors made since the week ended Dec. 8. Outflows have totaled $25.8 billion since mid-November, according to Lipper, a Denver-based research company.

"We see it headed in the right direction," said Matt Dalton, chief executive officer of Belle Haven Investments Inc. in White Plains, N.Y., who oversees about $600 million in municipal assets. "The fact that you're seeing it dwindle is a good sign."

Typically, the beginning of the year is when investors reallocate assets that matured from the previous year, Dalton said.

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 defaults amounting to "hundreds of billions of dollars" by Meredith Whitney, an analyst who correctly projected Citigroup Inc.'s dividend cut two years ago.

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 & Policy Priorities, a nonprofit group focused on issues affecting lower-income Americans.