The Thanksgiving holiday is expected to significantly cool off new supply in the primary market this week.
The Bond Buyer calculated that municipal bonds expected to be sold total $1.94 billion, versus a revised $9.81 billion last week.
This breaks down to a meager but expected $165.8 million in competitive offerings, compared with a revised $1.70 billion last week.
Also slated for sale are $1.77 billion of negotiated deals, against a revised $8.11 billion last week.
The largest deal hails from the nation’s capital. Morgan Stanley is expected to price $461.9 million of District of Columbia income tax-secured revenue refunding bonds on Tuesday. The bonds are rated Aa1 by Moody’s Investors Service, AAA by Standard & Poor’s and AA-plus by Fitch Ratings.
The deal is expected to be structured as adjusted SIFMA-rate bonds done out to six years, according to J.R. McDermott, a managing director who runs short-term underwriting at Morgan Stanley. It will have serial-type maturities at one year, two years, four years and six years.
RBC Capital Markets follows with an expected pricing of $295.6 million of California State Public Works Board lease revenue bonds for the University of California Regents. The bonds are rated Aa2 by Moody’s, AA-minus by S&P and AA by Fitch.
The deal was offered to retail investors Friday, and is slated to follow up with an institutional offering Monday. It is a serial structure, with maturities ranging from 2015 out through 2031, according to Jaime Durando, head of the syndicated desk at RBC.
Loop Capital Markets is expected to price $200.5 million of University of Connecticut general obligation bonds. The bonds are rated Aa2 by Moody’s, AA by Standard & Poor’s, and AA-minus by Fitch.
The retail order period extends from Friday through Monday. The institutional order period will be held on Tuesday.
Wells Fargo Securities is expected to price $175.7 million of Westchester County, N.Y., Health Care Corp. revenue bonds. The bonds are rated A3 by Moody’s and BBB by S&P.
Wells should refund $108 million of the Series 2000A bonds, in addition to pricing a total of $67 million of new-money Series 2011A and 2011B debt.
In addition, Bank of America Merrill Lynch is expected to price $175 million of Missouri Environmental Improvement and Energy Resource Authority water pollution control and drinking water refunding revenue bonds. The bonds are rated AAA by Fitch.
While the holiday week virtually ensures that overall volume will be light, expectations for the competitive market could accurately be described as anemic. The largest deals anticipated for the week fail to breach the $23 million mark.
Last week’s new issuance continued to be large, though not quite the calendar-year high that was anticipated at the start of the week. Nonetheless, traders and investors said the market performed well with the heavy volume.
The downshifting in new supply is expected to transfer emphasis over to the secondary market for the next couple of weeks, where dealers sit with heavy inventories. The shift will give the market the opportunity to absorb the heavy volume arriving over the past few weeks, according to Alan Schankel, managing director at Janney Capital Markets.
“The secondary market is where the action will be in the next couple of weeks,” he said.
