The municipal bond market expects an uptick in issuance for the week of April 22.
Total potential volume is expected to climb to $7.39 billion from $6.07 billion last week. With no deals expected to exceed $500 million, a competitive general obligation offering from Wisconsin should rank as the largest issue.
Industry watchers see a market with a solid tone to it, as it successfully battled through
Tax-exempt yields, in general, are near the lower end of the recent range, said Duane McAllister, co-manager of the intermediate tax free fund at BMO Global Asset Management U.S. Combined with strong demand, he added, deals did pretty well.
“There is a good deal of demand out there for primary issues,” said Justin Hoogendoorn, managing director of the strategic analytics group for the BMO Capital Markets fixed-income team. “Buyers are just meeting their needs in the primary market.”
The net outflows from funds don’t appear to be scaring people much, either, he said. A majority of the outflows from the most recent week hailed from short funds, or ultra-short-type funds, he added, which is typical for tax payments.
“People are looking beyond these near-term outflows to better re-investment cash flows coming in May,” McAllister said. “I heard a comment from a dealer this week saying that bonds with a May settlement are helping many of the buyers out there. So some of these deals are coming with a May settlement. That makes it easier on bonds rolling off on May 1 to be able to handle that.”
Digging into the numbers, $5.13 billion of municipal bonds is scheduled for negotiated sale this week, versus a revised $5.09 billion that were sold last week.
Bonds scheduled for competitive sale should total $2.26 billion, compared with about $976 million last week.
The competitive side of the ledger should involve the largest deal to arrive this week. On Tuesday, Wisconsin is expected to auction $434.5 million of GOs.
The bonds are rated double-A by Moody’s Investors Service, Standard & Poor’s and Fitch Ratings. They should arrive structured as serials maturing between 2014 and 2033.
The California Public Works Board leads the negotiated calendar. Wells Fargo Securities is expected to price $400 million of lease revenue bonds for the Judicial Council of California, the Yuba City Courthouse and lease revenue refunding bonds for the Department of State Hospitals, Coalinga.
The bonds are rated A2 by Moody’s, A-minus by S&P and BBB-plus by Fitch and expected to price Tuesday, after Monday’s a retail order period. They will arrive structured as serials maturing between 2016 and 2033, with a term bond in 2038.
Rice Financial Products should price $333.5 million of Houston public improvement refunding bonds in both taxable and tax-exempt series, as well as a tax-exempt series of certificates of obligation for a demolition program. The bonds are rated double-A by S&P and Fitch.
The bonds, of which $257.5 million are tax-exempt with the balance taxable, are expected to arrive Wednesday. They’ll be structured as serials with at least one term bond.
