Lull Expected in Primary Market, With $5.5 Billion on Tap

Except for two large school financings in Nevada and Florida to hold investors' attention this week, there will be a lull in primary market activity as new-issue volume declines by just over $1 billion from last week's total, continuing May's slow start.

New issuance will decline for the second week in a row, as municipalities are expected to sell an estimated $5.46 billion this week versus a revised $6.54 billion last week, according to Thomson Reuters.

The drop in volume is more noticeable in the negotiated market, where there is $3.98 billion expected compared with a revised $5.07 billion last week. There are $1.47 billion in competitive deals expected compared with last week's revised $1.46 billion.

The Clark County, Nev., School District will headline as the largest deal of the week, with $675 million of general obligation debt coming in a competitive deal planned for Thursday. The district's outstanding GOs are rated Aa2 by Moody's Investors Service, and AA by Standard & Poor's and Fitch Ratings.

The Miami-Dade CountySchool Board will make some history on Wednesday when it sells $537.6 million of certificates of participation - the single largest COP deal from a Florida public school district.

The appropriation-backed issuel is being priced by senior manager Goldman, Sachs & Co. Ahead of the official pricing, the firm will conduct a retail order period tomorrow.

The bonds, which will be insured by Assured Guaranty Corp., are structured to mature serially from 2014 to 2028 with a term bond maturing in 2033. The debt has underlying ratings of A3 from Moody's and A from Standard & Poor's, and proceeds will finance the construction, renovation, and conversion at a handful of schools in the district.

In a multi-series financing of both tax-exempt and taxable debt, Washington's Energy Northwest will sell $273.2 million of electric revenue refunding bonds in a Goldman-managed deal planned for pricing on Wednesday.

The utility's outstanding electric revenue bonds have a natural Aaa rating from Moody's, and AA-minus by Standard & Poor's and Fitch, and those ratings are expected for the new issue as well, according to a source at Goldman.

The tax-exempt portion of the deal consists of three tranches of Series 2008D bonds that total $264.7 million and will refund outstanding debt for three different electric projects, including Project 1, the Columbia generating station, and Project 3. The taxable leg will also consist of three series of 2008E bonds totaling $8.45 million and is refunding outstanding bonds for the same three projects. Bonds in both series range in maturity from 2009 to 2018.

In the Southwest, the Scottsdale, Ariz., Industrial Development Authority will issue $241 million of health care revenue bonds in a conversion of auction-rate debt to fixed rate, while the Lower Colorado River Authority, a Texas utility, will sell $201.4 million of revenue refunding bonds tomorrow.

The Scottsdale bonds, which are being sold on behalf of Scottsdale Healthcare, will be priced by senior manager Citi on Thursday. The deal will consist of $151.5 million of revenue refunding bonds in Series 2008A, and the structure was still being finalized at press time.

Series 2006F is expected to be converted from auction rate to fixed rate, but according to the preliminary official statement, the conversion might not actually take place depending on market conditions at the time of the pricing.

The Series 2006F bonds are insured by Financial Security Assurance, while Series 2008A is expected to be rated A3 by Moody's, BBB-plus by Standard & Poor's, and A-minus by Fitch.

The Texas utility deal will be priced by Morgan Stanley tomorrow and will be structured to include three term bonds in 2023, 2028, and 2037. Bonds are expected to carry underlying ratings of A1 from Moody's, A from Standard & Poor's, and A-plus from Fitch, but the preliminary official statement indicates that the authority and underwriters were considering bids from various bond insurers prior to the sale. Proceeds will refund outstanding Series A commercial paper notes.

 

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