The Week Ahead

November Starts Off Strong

November is starting off with a relatively strong week of new issuance in the municipal market, with two deals totaling at least $1 billion each. The amount of new deals continues to climb after a strong October.

For this week, $8.24 billion is expected to reach the primary market. This breaks down to $6.7 billion of negotiated volume and $1.54 billion of competitive volume. That compares to a revised $7.04 billion, with $5.49 billion negotiated and $1.55 billion competitive, that the primary market saw last week.

Leading off in the negotiated sector, the New York Liberty Development Corp. is expected to price the largest deal of the week. It should bring to market $1.25 billion of Liberty revenue bonds for 4 World Trade Center.

The bonds are rated A-plus by Standard & Poor’s and A by Fitch Ratings. Goldman, Sachs & Co. will be the primary book-runner on the issue. The multiple term bonds are expected to come to market either Tuesday or Wednesday, depending on the stability of the markets.

There will be no retail order period, according to Marvin Markus, a managing director in public-sector and infrastructure banking at Goldman Sachs. The repayment structure of the transaction is expected to be interest-only for 15 years, and then level debt service for the remaining 25 years, he said.

“It’s an inaugural issue of a credit that is structured between the combination of [Port Authority of New York and New Jersey] support and the City of New York lease,” Markus said. “Investors are spending time analyzing the credit metrics, which includes familiarizing themselves with the redevelopment of the Trade Center, the success of which will enhance the Port Authority.”

In the second largest deal this week, the Tennergy Corp. is expected to sell $1 billion of variable-rate gas revenue bonds. Jefferies & Co. is the lead book-runner. The bonds are rated Aa3/VMIG-1 by Moody’s Investors Service.

The transaction is to be issued in three variable modes. The first, called a term mode, will entail rolling term interest. The second should involve a rate mode, followed by a weekly mode. The par amount of the bonds is subject to change.

Connecticut expects to come to market with $715 million of general obligation and refunding bonds in two series, one tax-exempt and the other taxable. The bonds are rated double-A by all three rating agencies.

The tax-exempt series should include $595.4 million of Series 2011D current interest bonds. The taxable issue should involve $78.3 million of Series 2011E current interest bonds. JPMorgan is expected to price the offering.

The North Texas Tollway Authority is expected to bring to market $673.7 million of special projects system revenue bonds in two series, one tax-exempt and the other taxable. The bonds are rated AA by Standard & Poor’s and AA-minus by Fitch.

The tax-exempt series involves $595.4 million of Series 2011D current interest bonds. The taxable series includes $78.3 million of Series 2011E current interest bonds. JPMorgan will also be the lead book-runner on them.

Also, the Virginia Resources Authority is issuing $227 million of infrastructure and state revenue bonds Tuesday and Wednesday. The deal, which is expected to be upsized by $38 million, will include tax-exempt and taxable bonds. Retail investors will get the first run at them on Tuesday.

In the competitive market, the Washington Suburban Sanitary District, issuing for Maryland’s Montgomery and Prince George’s counties, will lead the charge when it bids $300 million of consolidated public improvement bonds. The bonds are expected to find a highest bidder on Tuesday. Last week’s issuance saw the Massachusetts School Building Authority arrive both earlier and larger than expected. The MSBA saw favorable market conditions and jumped the gun, according to executive director Katherine Craven. The  deal was upsized to $1 billion from $600 million.

Industry pros said deals in the negotiated market were priced to go, based on the supply expected this week. Several reported negotiated issues that were oversubscribed include the Chicago Transit Authority and the New Jersey Health Care Facilities’ St. Barnabas Health deals.


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