Two sizable California offerings and a large North Carolina power deal will lead the primary activity this week as the municipal market faces a slight lull in new-issue volume on the heels of a supply swell last week.
An estimated $4.81 billion of competitive and negotiated volume is expected to be sold this week, compared with a revised $7.29 billion that came to market last week, according to Thomson Reuters.
There are no sizable deals over $100 million in the competitive market this week. The largest competitive deal on the calendar is a $52.5 million sale of general obligation refunding bonds from Virginia Beach, expected tomorrow. The bonds, which mature from 2008 to 2015, have ratings of Aa1 from Moody's Investors Service,AAA from Standard & Poor's, and AA-plus from Fitch Ratings.
In the largest negotiated deal of the week, the California Statewide Community Development Agency will sell $534 million of revenue bonds on behalf of Catholic Healthcare West in a deal that will be priced by Citi on Wednesday.
The bonds will be largely insured by MBIA Insurance Corp., but various maturities will be insured by Assured Guaranty. However, the breakdown of which maturities will be enhanced by each of the two insurers, and other details of the structure, were still being hammered out by bankers at press time. The bonds have underlying ratings of A2 from Moody's, A from Standard & Poor's, and A-plus from Fitch.
The California authority was in the market last week when it issued two series of revenue bonds on behalf of Sutter Health in a deal negotiated by lead manager Morgan Stanley. The $86.7 million of Series 2008A bonds, insured by Financial Security Assurance, had a final maturity in 2038 with a 5.05% coupon priced at par. That was 23 basis points cheaper than the generic insured GO scale in 2038 published by Municipal Market Data at the time of the pricing.
In addition, the CSCDA issued $252.6 million of uninsured health care revenue bonds for Sutter in Series 2008B, which was rated Aa3 by Moody's and AA-minus by Standard & Poor's, and featured a 2048 term bond with a 5 1/4% coupon that was priced to yield 5.40% - 66 basis points cheaper than the MMD double-A GO scale.
In other Golden State activity, the California Department of Water Resources will also come to market this week with $295 million of revenue debt when JPMorgan prices its deal tomorrow after today's retail order period.
The structure of the water deal will include just one bullet maturity in 2018, which will carry ratings of Aa3 from Moody's, A from Standard & Poor's, and A-plus from Fitch. Underwriters were considering insurance from Assured Guaranty at press time on Friday.
The North Carolina Eastern Municipal Power Agency, meanwhile, will sell $430 million of revenue bonds in a deal that is also being priced by Citi tomorrow.
Series 2008A will total $357.6 million and will mature from 2013 to 2024, while Series 2008B will total $73.1 million and will mature from 2009 to 2016 with a term bond due in 2024. Both series are are refundings, and Series 2008B is federally taxable.
The bonds have underlying ratings of Baa1 from Moody's and BBB-plus from Standard & Poor's. Underwriters were considering enhancement from certain monoline bond insurers, according to the preliminary official statement, and may insure certain or all of the bonds in the two series.
The deals from the two specialty states will be followed by another health care offering in the Midwest, a California housing sale, a Texas school bond issue, and sizable deal from a Kentucky state issuer.
In the Midwest, the Illinois Finance Authority will issue $380 million of revenue bonds on behalf of the Children's Memorial Hospital. Goldman, Sachs & Co. will price the bonds tomorrow in two series, one insured and one uninsured.
Series 2008A will be insured by Assured Guaranty and will mature in 2033 and 2047. Series 2008B will be structured with serial bonds maturing from 2015 to 2023 and term bonds in 2028 and 2039, and is rated A-minus by Standard & Poor's and AA-minus by Fitch.
The California Housing Finance Agency will come to market with $300 million of home mortgage revenue bonds in a two-pronged deal that will be priced by Banc of America Securities LLC on Wednesday, following a two-day retail order period today and tomorrow.
Series 2008J will be insured by FSA and will consist of serial bonds maturing from 2009 to 2018, while Series 2008K will consist of 2023, 2028, 2033, and 2038 maturities and will carry ratings of Aa2 from Moody's and AA-minus from Standard & Poor's. Both series will be subject to the alternative minimum tax.
In the Texas education sector, the Leander Independent School District is planning to issue $277 million of school GOs.
RBC Capital Markets LLC is expected to price the deal tomorrow with a structure that includes bonds maturating from 2009 to 2042.
In the Southeast, the Kentucky State Property and Building Commission will issue an estimated $200 million of revenue bonds tomorrow when Citi prices the deal with a structure consisting of serial bonds maturing from 2008 to 2027. The bonds are rated Aa3 by Moody's, A-plus by Standard & Poor's, and A-minus by Fitch.
