With a $1.1 billion Chicago airport deal postponed, the New York City Transitional Finance Authority and North Carolina instead will offer two of the largest deals in a lackluster week as February starts with an estimated $3.02 billion of volume, according to Ipreo LLC and The Bond Buyer.
Last week, the municipal market maintained recent gains while remaining relatively attractive — offering long bonds priced at over 100% of Treasuries. A revised $2.24 billion of the $2.7 billion originally expected was priced, according to Thomson Reuters.
The triple-A general obligation bond due in 30 years closed Friday at a 4.78%, down from 4.86% last Monday, according to Municipal Market Data.
This week’s primary market will be relatively sparse now that Chicago has decided to pull its $1.1 billion offering for O’Hare International Airport.
The city is fighting a lawsuit filed by the airport’s two largest carriers challenging its authority to finish work on an $8 billion expansion.
The deal was originally slated to price Wednesday after a retail order period Tuesday, but is now pending until there is a resolution of the litigation, market participants said Thursday.
A spokesman for Chicago’s finance department said officials hope to enter the market quickly, but no timetable has been set.
Citi is the book-running senior manager and Siebert Brandford Shank & Co. is co-senior. The deal includes a mix of securities, some backed solely by passenger facility charges and others by both PFCs and federal grants.
The New York City Transitional Finance Authority will now lead the primary activity this week with $875 million of Fiscal Series 2011 future tax-secured bonds, which will come in two series.
The larger portion will consist of $775 million of tax-exempt, Sub-series D-1 subordinate-lien bonds that are structured to mature from 2013 to 2031.
Goldman, Sachs & Co. said it will price the bonds on Wednesday, after a retail order period Monday and Tuesday. The bonds are secured by a lien on tax revenues of the authority, which includes personal income tax bonds and sales tax revenue, according to the preliminary official statement.
An additional $100 million consisting of taxable Sub-series D-2 subordinate bonds will be sold competitively on Wednesday and will mature from 2015 to 2020.
The bonds are expected to be rated Aa1 by Moody’s Investors Service, and AAA by Standard & Poor’s and Fitch Ratings. Proceeds will finance general city capital expenditures.
In the Southeast, meanwhile, North Carolina will also add to the competitive market with $500 million of Series 2011 capital-improvement limited obligation bonds.
Rated Aa1 by Moody’s and AA-plus by Fitch, the bonds are structured to mature from 2012 to 2031.
The proceeds will be used to finance special indebtedness projects, such as those associated with infrastructure, correctional facilities, higher education, health care facilities, K-12 schools, and youth programs, among others, according to the POS.
One of the only other sizable deals expected to price this week in the negotiated market is a $338 million general obligation sale from the University of Minnesota Regents. Barclays Capital is expected to price the bonds on Tuesday with ratings of Aa1 from Moody’s and AA by Standard & Poor’s.
The maturity structure of the deal was not available at press time.
Last week, the largest deal to come to market was a $750 million hospital revenue sale on behalf of Sutter Health. The sale was upsized from $575 million and accelerated because the market had firmed.
Yields on the $475 million California Health Facilities Finance Authority series ranged from 3.45% with a 5% coupon in 2016 to 6.25% with a 6% coupon in 2042. The bonds are callable at par in 2020.
Yields on the $275 million California Statewide Communities Development Authority series ranged from 3.45% with a 5% coupon in 2016 to 6.20% with a 6% coupon in 2042.
The credit is rated Aa3 by Moody’s and AA-minus by Standard & Poor’s and Fitch.
