An uptick in volume this week will bring a handful of sizable deals to the primary market, but won't be enough to relieve the supply shortage that has prevailed so far in 2014, municipal traders said.
Issuers in New York, Connecticut, Washington, and California will lead the week's new-issue activity, contributing to $5.38 billion of expected volume, according to IPREO LLC and The Bond Buyer.
"The supply next week is not onerous, it's pretty manageable with recognizable names," said a New York municipal trader, pointing to a $760 million financing from the New York Transitional Finance Authority and a $500 million New York Metropolitan Transportation Authority offering - the pair of deals that will lead the pricing activity in the Northeast region.
"The deals should do just fine," he said. "There's nothing from a supply standpoint that should concern the market."
Volume will increase from last week's revised $3.17 billion as reported by Thomson Reuters.
Even after the lower-than-expected employment number that made the Treasury and municipal markets a little uneasy on Friday, the trader said the upcoming deals should find demand.
"I think Treasuries will hold overnight and hang in there, so I think the market is in pretty decent shape," he said.
The March employment report showed nonfarm payrolls increased by 192,000 new jobs last month after rising 197,000 in February. The unemployment rate was unchanged at 6.7 percent, according to the Labor Department. Economists had expected employment to increase 200,000 last month and the unemployment rate to fall one-10th of a percentage point.
"Obviously, you had a little bit of a surprise move with the employment number," the trader said. "The Treasury market was set up for a larger number, and you saw some follow through in our market. We underperformed a little, but in terms of relative value munis are still attractive."
The TFA deal will test the market's appetite with $650 million of Series 2014 D Subseries D-1 future tax secured subordinate bonds, which will price in a Bank of America Merrill Lynch-led negotiated deal planned for Tuesday after a two-day retail order period.
The deal is rated Aa1 by Moody's Investors Service and triple-A by the two other major rating agencies.
In addition, the authority plans to price $110 million of Series 2014 D - Subseries D-2 future tax secured revenue debt in the competitive market on Tuesday.
The MTA will follow on Thursday with a $500 million sale of transportation revenue bonds rated A2 by Moody's, A-plus by Standard & Poor's and A by Fitch Ratings.
Wells Fargo Securities is slated to price the offering after conducting a one-day retail order period.
A $220 million sale of general obligation bonds is on tap from the University of Connecticut, with Wells Fargo set to price the deal on Tuesday, following a two-day retail order period that concludes Monday.
Rated Aa3 by Moody's, AA by Standard & Poor's, and AA-minus by Fitch, the deal is structured with bonds maturing from 2015 to 2034.
Other large offerings this week will include a $646.5 million sale of electric revenue and refunding bonds from Energy Northwest, which owns and operates the Northwest's only nuclear energy facility.
The two pronged deal on behalf of the Columbia Generating Station is divided into $529.8 million of tax-exempt bonds in Series 2014-A, $26 million in of tax-exempt bonds in Series 2014-A for Project 3; and $90.68 million of taxable debt in Series 2014-B.
Slated for pricing by JPMorgan Securities, the bonds are rated Aa1 by Moody's, AA-minus by Standard & Poor's, and AA by Fitch.
The California Public Works Board will issue $423 million of lease revenue bonds in a two-pronged deal that is planned for pricing by Siebert Brandford Shank & Co. on Thursday, after a retail order period on Wednesday.
The offering includes $265 million of Judicial Council of California 2014 Series B bonds for the Stockton Courthouse, and $158 million of Department of Corrections and Rehabilitation 2014 C bonds for the North Kern State Prison buildings project.
The bonds are rated A2 by Moody's and A-minus by the two other major rating agencies.
Clark County, Nev., will round out the activity in the Far West region when it sells general obligation debt in two series sized at $136.34 million and $64.50 million headed for the competitive market on Tuesday.
The deals should find eager buyers given the recent supply shortage, the New York trader said.
"There is money around, and as long as Treasuries have a firm bid, munis will do fine," he added.
Last week's largest deal, the $968.2 million University of California sale of tax-exempt and taxable bonds, came on Thursday.
Wells Fargo priced the $556.7 million of tax-exempt bonds with yields ranging from 0.15% with a 4% coupon in 2015 to 4.21% with a 5% coupon in 2049. The bonds are rated Aa2 by Moody's Investors Service and AA by Standard & Poor's.
At the time of the pricing, the generic, triple-A GO scale in 2044 yielded 3.69% -- down two basis points from the previous session, according to Municipal Market Data. On Friday it fell five basis points from a week earlier to 3.64%, according to MMD.
