More than $10 billion of new volume is expected to arrive in the municipal market this week on the heels of the price stability that followed some volatility last week.
According to Ipreo LLC and The Bond Buyer, an estimated $10.38 billion is expected to be priced — including a $1.4 billion utility financing and a $1 billion New York City tax-exempt and taxable general obligation sale.
Last week, by comparison, the market saw $10.13 billion of new volume, according to Thomson Reuters — $1.98 billion shy of the $12.11 billion originally estimated.
The lower-than-expected volume was partly due to the delay on Thursday of a $1.3 billion New York Liberty Development Corp. tax-exempt revenue bond sale. Goldman, Sachs & Co. said on Friday that the deal remains on the day-to-day calendar and was removed from the calendar last week because of market instability.
According to Municipal Market Data, the generic, triple-A GO scale ended at a 4.61% yield on Friday — unchanged from Thursday’s close and one basis point lower than its recent high mark set Nov. 17.
That followed some bumpy terrain on Tuesday and Wednesday when long yields rose more than 20 basis points, and 20-year yields climbed to a 17-month high.
The 30-year MMD scale had ended at a 4.36% yield last Monday.
In the market this week, the largest financing will consist of $1.4 billion of combined hydroelectric project revenue bonds issued by American Municipal Power Inc., a non-profit wholesale power and energy distributor headquartered in Columbus, Ohio.
Chicago-based BMO Capital Markets is planning to price the bonds on either Tuesday or Wednesday with a structure of serial and term bonds that ranges from 2016 to 2050.
The bonds are rated A3 by Moody’s Investors Service, and A by Standard & Poor’s and Fitch Ratings.
The bulk of the deal — $1.13 billion of Series 2010B — will be comprised of taxable direct-subsidy Build America Bonds, while the two other series consist of $148.2 million of traditional taxable bonds in Series 2010A, and $116 million of taxable direct-subsidy new clean renewable energy bonds in Series C.
In the Northeast, New York City will bring $1.04 billion of GO debt to the negotiated market, including $745 million of taxable BABs in the fiscal 2011F series, $245 million of tax-exempt bonds in fiscal 2011G series, and $55 million of tax-exempt debt in the fiscal 2011H series.
JPMorgan will take indications of interest for the BAB portion on Tuesday, followed by a pricing on Wednesday.
The firm is also targeting retail investors with a three-day retail order period scheduled for Monday, Tuesday and Wednesday.
The bonds are rated double-A by all three major agencies. The structure was still being discussed at press time, according to an underwriter.
Besides its negotiated sale, the city will also issue $130 million of GO debt in the competitive market on Wednesday with bonds maturing from 2012 to 2018.
A New York underwriter said although the Liberty bond deal was pulled last week, he believes the large BAB deals slated for this week — especially the New York City GOs — will generate strong institutional demand for its size and timing ahead of the program’s expiration on Dec. 31 unless Congress decides to renew it.
In other Northeast activity, Massachusetts is slated to sell $576.2 million of transportation fund revenue bonds in a JPMorgan-led deal.
The Series 2010 A accelerated bridge program debt consists of taxable BABs and direct-pay recovery zone economic development bonds. The securities are rated triple-A by Moody’s and Standard & Poor’s.
The firm will price the tax-exempt bonds for retail and take indications of interest on the taxable portion on Tuesday, with a pricing slated for Wednesday.
The Nebraska Investment Financing Authority will bring $675 million of single-family housing revenue debt to market in a three-pronged offering scheduled for pricing by JPMorgan.
The sale date was not available at press time.
Series 2010A is comprised of fixed-rate revenue bonds not subject to the alternativ-minimum tax, while Series 2010B consists of variable-rate bonds that are also not subject to the AMT. Series 2010C is comprised of variable-rate securities that are subject to the AMT, according to the POS.
Two of the week’s other large deals hail from Georgia and Illinois.
Atlanta will sell $500 million of airport general revenue refunding bonds in a negotiated deal being priced by Citi on Tuesday, while the Metropolitan Water Reclamation District of Chicago will also bring $500 million of debt consisting of taxable GO capital improvement bonds structured as BABs.
The Chicago water deal is planned for pricing by JPMorgan on Wednesday, though the structure was still being hammered out at press time. The airport deal, which is rated A1 by Moody’s and A-plus by Standard & Poor’s, is structured to mature from 2012 to 2030.
In the competitive market, the San Francisco Public Utililty Commission is on tap to sell a two-pronged offering of tax-exempt and taxable water revenue debt on Wednesday totaling $523.5 million.
The tax-exempt portion consists of $173.5 million of serial bonds maturing from 2017 to 2030, while the $350 million taxable BAB portion is structured to mature from 2031 to 2050. Both series are rated Aa2 by Moody’s and AA-minus by Standard & Poor’s.
