Despite the strong tone in the municipal market for much of this week, issuers have noticeably scaled back new financings next week, giving the market a chance to catch its collective breath after digesting a recent glut of new volume.
On the heels of a revised $7.19 billion in new issues that Thomson Reuters reported was priced this week, next week’s $2.96 billion estimate provided by The Bond Buyer and Ipreo LLC pales in comparison.
Activity in the Good Friday holiday shortened week will be void of any mammoth deals like the $1.4 billion New Jersey Turnpike Authority revenue financing that anchored this week’s calendar and benefited from a rally that was driven by the combination of a firm Treasury market, attractive municipal to Treasury ratios, and overseas fears.
The deal ended up being priced as much as 12 basis points lower compared to Tuesday’s retail order period and trading up in the secondary market later in the week. At the repricing, its final 2043 split maturity was priced with yields of 4% at par, 4.10% with a 4%, and 3.87% with a 5% coupon.
The largest deal on next week’s calendar is a $245.2 million Northeast Ohio Regional Sewer District wastewater improvement revenue sale that is expected for pricing on Tuesday by Siebert, Brandford Shank & Co.
The bonds -- which are rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s -- will be priced with a structure that includes serial bonds maturing from 2020 to 2033 with term bonds expected in 2038 and 2043.
Only a handful of other somewhat sizeable deals are planned, including a $244 million San Bernardino Community College District, Calif. general obligation refunding.
The deal was on the calendar this week, but because it is rate sensitive, it is now on the day to day calendar, according to a Piper Jaffray underwriter. Rated Aa2 by Moody’s and AA-minus by Standard & Poor’s, the deal is structured with serial bonds maturing from 2013 to 2033 -- and also includes a separate $36 million taxable tail.
Franklin County, Ohio is gearing up to issue $210.9 million of hospital facility revenue refunding and improvement bonds on behalf of OhioHealth Corp. Barclays Capital is expected to price the bonds on Tuesday with a structure that includes serial bonds from 2014 to 2033 and term bonds in 2038 and 2043.
Washoe County, Nev., will join the negotiated activity when it sells $150 million of highway revenue fuel tax bonds on Tuesday in a deal led by RBC Capital Markets and rated A1 by Moody’s and A-plus by Standard & Poor’s.
In the Midwest, the Oklahoma City Economic Development Trust is planning a $143.5 million sale of tax apportionment revenue bonds. The larger portion of the sale, $117.7 million, is federally taxable and will mature from 2014 to 2027 with a term expected in 2032, while the $25.8 million tax-exempt piece will mature serially from 2032 to 2034. Bank of America Merrill Lynch is slated to price the offering on Tuesday and the bonds are rated Aa2 by Moody’s and AA by Standard & Poor’s.
In California, the Sonoma County Junior College District is expected to sell $122 million of GO revenue refunding bonds in a Piper-led deal on Tuesday that is structured to mature serially from 2013 to 2029 and is rated Aa2 by Moody’s and AA-minus by Standard & Poor’s.
The prospects for new issuance are even bleaker in the competitive market, where the largest deal on tap is an $80 million Virginia Housing Development Authority mortgage revenue remarketing expected on Wednesday with triple-A ratings from Moody’s and Standard & Poor’s and a structure that includes serial bonds maturing from 2016 to 2038.
Most of the larger deals were well received this week and there was little market reaction Wednesday to the Federal Open Market Committee’s announcement that it would keep the target range for the federal funds rate at zero to 0.25% as long as the unemployment rate remains above 6.5% and inflation is projected to be no more than 2.5%.
The market was mostly firm this week, with some spotty weakness. For instance, on Thursday, the generic, benchmark, triple-A GO bond in 30 years ended at a 3.10% -- unchanged from the previous day -- and one basis point lower than where it began the week last Monday, according to Municipal Market Data.
One of the larger deals that priced into some weakness was the $500 million Metropolitan Transportation Authority revenue sale priced by Barclays whose yields were increased by as much as six basis points on the long end, with the final split 2043 maturity repriced to yield 3.87% and 4.10% -- nearly 100 basis points higher in yield than the comparable MMD scale at the time of the pricing.
