Billion-Dollar Deals From Texas and Utah Boost Volume

A pair of billion-dollar deals — one in Texas and the other in Utah — will be part of an estimated $7.92 billion expected to be priced in the primary market this week, according to Ipreo LLC and The Bond Buyer. The mammoth deals will help pump some life into what has recently been a lackluster municipal market that’s short on volume.

Last week, investors saw the arrival of a revised $8.19 billion of new volume, an increase from the  $6.72 billion originally projected . The week before, market activity was virtually nonexistent due to late summer holidays, and as a result new volume sunk to $2.64 billion, according to Thomson Reuters.

This week, the Texas Transportation Commission will kick off the activity with its $1 billion sale of highway improvement bonds, roughly $800 million of which will be structured as taxable Build America Bonds, and the rest as tax-exempt ­securities.

JPMorgan is planning to offer the tax-exempts to retail investors and take indications of interest on the BABs on Tuesday before the official pricing on Wednesday, though the structure was still being finalized at press time.

The bonds are expected to have triple-A ratings from Moody’s Investors Service and Fitch Ratings, and a AA-plus from Standard & Poor’s.

Issuers in the Southwest will share the spotlight in the negotiated market this week.

The largest of the region’s offerings includes a $1 billion general obligation sale from Utah. Even though the state will issue two separate deals that will be senior-managed by different firms, they will both be priced on Thursday and are both expected to carry triple-A ratings from all three major rating agencies.

Goldman, Sachs & Co. is the lead book-runner for the larger portion of the deal — $575 million of taxable BABs — while JPMorgan will run the books on the $425 million tax-exempt portion, which includes new money and refunding bonds. The structures for both deals were still being discussed and finalized at press time, according to underwriters at both firms.

The New Mexico Finance Authority is planning to sell $550 million of transportation refunding bonds in a negotiated deal being senior-managed by Morgan Stanley and priced either Tuesday or Wednesday. The bonds are rated Aa1 by Moody’s and AA-plus by Standard & Poor’s, but the structure was unavailable at press time.

Meanwhile, a $527 million offering of taxable BABs is being readied for pricing by the University of California Board of Regents as early as Monday or Tuesday. The deal, which is being senior-managed by Morgan Stanley, is rated Aa2 by Moody’s and AA-minus by Standard & Poor’s, but the details about the maturity structure were not available at press time.

Also in California, the San Diego County Regional Airport Authority is expected to issue $418 million of subordinate-lien revenue bonds in a three-pronged deal being senior-managed and priced by Siebert, Brandford, Shank & Co. on Wednesday.

The deal, which is not subject to the alternative minimum tax, is comprised of $257.7 million of Series A bonds which on Friday were tentatively structured to mature serially from 2014 to 2036; $27.1 million of Series B bonds tentatively structured to mature from 2011 to 2030, as well as $132.9 million of Series C bonds, which are structured as taxable direct-pay BABs maturing in 2040, according to a underwriting source at the firm. The bonds are rated A2 by Moody’s and A by both Standard & Poor’s and Fitch.

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