With volume expected to return to its recent paltry levels this week, the municipal market will look to a $321 million sale of North Carolina general obligation bonds for direction.
IPREO LLC and The Bond Buyer estimates volume will drop to $2.55 billion from last week's revised $4.39 billion reported by Thomson Reuters - nearly $1 billion less than the original $5.38 billion expected.
About $3.17 billion was issued in the week of March 31, according to Thomson.
This week's pullback in volume may be less noticeable amid the seasonal sluggishness that typically coincides with the April 15 deadline for filing personal and corporate income taxes, municipal sources said.
"We have some investors that have been on hold until they have a definite picture of their tax situation," said a North Carolina trader. "Once that's past we will have more interest from those investors that will come back into the market, further adding to an environment where there is low supply and high demand, and that should drive prices higher."
North Carolina's GO refunding bonds set for Wednesday in the competitive market will be the largest deal of the week and could give the market some price guidance, the trader said.
"Given the nature of its size and quality it will receive a good bid and probably set the tone for the rest of the market," said a North Carolina trader on Friday.
"Along with the general market, there is an extreme lack of supply in North Carolina, and year over year issuance is down considerably, so I would expect there to be very good demand for that sale," he added.
The deal, which is rated triple-A by Moody's Investors Service, Standard & Poor's and Fitch Ratings, is structured with serial bonds maturing from 2015 to 2025.
The negotiated market will offer an even lighter fare this week, with a $200 million sale of Massachusetts Bay Transportation Authority the largest deal on the calendar.
The offering of senior sales tax bonds is expected to be priced by Barclays Capital on Tuesday and is rated Aa2 by Moody's and AAA by Standard & Poor's. The bonds are structured to mature from 2016 to 2025 with term maturities expected in 2039 and 2044.
Elsewhere in the Northeast region, a $197.5 million sale of revenue and refunding bonds is being prepared by the New Jersey Educational Facilities Authority for its higher education capital improvement fund.
Raymond James & Associates is planning to price the issue on Wednesday structured as serial bonds maturing from 2015 to 2033.
The bonds are special obligations, subject to annual appropriations from the state, and are linked to the state's GO rating, which was downgraded last Wednesday by Standard & Poor's to A-plus from AA-minus, citing New Jersey's sizable structural imbalance.
The higher education bonds are rated A1 by Moody's, A by Standard & Poor's, and A-plus by Fitch.
