A $1 billion taxable offering from Port Authority of New York & New Jersey highlights $5 billion of planned issuance this week in a market that's become increasingly hungry for new supply.
"With the run-up in municipals since the start of the year that suggests there is cash to spend," said Howard Mackey of Rice Financial Products. "The market has performed better than Treasuries and munis have widened in the 10-year area versus Treasuries, so that is evidence of some strength," he said on Friday when the ratio was at 91.9%, according to Municipal Market Data.
He said the Port Authority deal will be of particular interest because of its size and credit quality - and could even entice some overseas buyers if the rates are attractive enough.
The deal, which consists of a bullet maturity in 2046, is slated to be priced by Bank of America Merrill Lynch & Co. on Wednesday. When it last came to market, the port authority's consolidated bonds were rated Aa3 by Moody's Investors Service, and AA-minus by Standard & Poor's and Fitch Ratings.
On Friday, a source at Merrill could not confirm the ratings for the new issue.
The deal comes to market amid an estimated $5 million of new issuance expected to be priced this holiday-shortened week, according to Ipreo LLC and The Bond Buyer. That compares to last week when a revised $3.81 billion actually came to market, according to Thomson Reuters.
Mackey said investors should also be interested in the week's other large deals, especially those still hoping to spend reinvestment cash.
He said the $650 million New York State Thruway Authority general revenue offering should be in demand among retail investors and institutional accounts.
"It's a New York name that has not been in the market for a while, and I think it will have a little yield for the New York funds," he said.
Slated for pricing by Barclays Capital on Wednesday, the thruway deal is rated Aa2 by Moody's and A by Standard & Poor's.
Strong demand for new bonds kept yields down and drove prices in the secondary market, while municipal mutual funds got their first inflows after 33 weeks of outflows. According to Lipper, investors placed $103 million into the funds.
Elsewhere in the Northeast, the Massachusetts Development Finance Agency is preparing a $250 million sale of revenue bonds. The deal is expected to be priced by JPMorgan Securities on Wednesday for retail investors, followed by an institutional pricing on Thursday.
Inthe competitive market, a large Washington general obligation offering is slated to come to market on Wednesday in three series, the largest of which is $355 million of various purpose bonds scheduled to mature from 2022 to 2039.
Another $273.91 million of motor vehicle fuel tax GOs will mature from 2015 to 2039, while $88.1 million of taxable GOs will mature from 2015 to 2022.
The bonds are rated Aa1 by Moody's and AA-plus by Standard & Poor's and Fitch.
Fairfax County, Va., meanwhile, will issue $316.81 million of GO public improvement and refunding bonds. Rated triple-A by Moody's and Standard & Poor's, the bonds are structured to mature from 2014 to 2033.
One of the only other larger negotiated deals this week will be a $205 million Leander, Tex. Independent School District school building offering being priced by RBC Capital Markets.
Last week's largest deal was an $855 million New York City Transitional Finance Authority offering of future tax secured bonds whose $505 million tax-exempt final 2040 maturity was priced to yield 4.30% at the time that the generic, triple-A GO scale in 2044 ended at a 3.93%, according to MMD.
The 30-year benchmark GO ended down three basis points at a 3.90% at the close of trading on Friday ahead of the three-day weekend in observance of the Martin Luther King Jr. holiday.
