Illinois GO Sale Leads $7.48 Billion Slate

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New issuance of $7.48 billion is expected to hit the primary this week, as Illinois tests the market's appetite for a second time this month with its general obligation credit — this time a $750 million sale that will be joined by large financings from issuers in Texas, California, and New Jersey.

Slated to be priced by Wells Fargo Securities on Thursday and mature from 2015 to 2039, the Illinois deal will be the largest amid $7.48 billion of new issues estimated by Ipreo LLC and The Bond Buyer. Long Illinois spreads narrowed earlier this month when it competitively sold $250 million of GO debt, as investor confidence rose on Gov. Pat Quinn's plan to make an expiring income tax hike permanent.

Yields on the competitive deal ranged from 0.60% in 2015 to 4.54% on the final 2039 maturity, which was between five and 10 basis points tighter than trading levels prior to the April 11 pricing, as reported by Thomson Reuters MMD.

Still, the 2039 maturity was 112 basis points higher in yield than the generic, triple-A GO scale in 25 years at the time of pricing, according to Municipal Market Data.

Illinois, rated A3 by Moody's Investors Service and A-minus by Standard & Poor's and Fitch Ratings, remains the weakest among the states, but S&P revised the outlook to developing after the passage of recent pension reforms and said legislative decisions in the coming weeks are crucial to credit stabilization.

The Texas Public Finance Authority will sell $700 million of unemployment-compensation obligation assessment revenue refunding bonds. Bank of America Merrill Lynch is expected to price the deal Thursday with triple-A ratings from the big three agencies, but the structure was still being hammered out at press time.

In two-pronged financing from the New Jersey Economic Development Authority, $632 million of taxable and $527 million of tax-exempt school facilities construction refunding bonds are expected to be priced by BofA Merrill on Wednesday. The bonds are rated A1 by Moody's, A by S&P and A-plus by Fitch .

California will bring two series of its various-purpose GO debt to the competitive market on Tuesday when it sells $575 million of tax-exempt securities, and $175 million of taxable debt, both rated A1 by Moody's and A by S&P and Fitch.

In the state's last $1.8 billion GO debt on March 13, the final 2043 maturity on the new-money series was priced to yield 4.22% by book-runner Bank of America Merrill — 51 basis points higher in yield than the generic triple-A scale at the time, according to MMD.

A $339.5 million sale from the Ohio Water Development Authority is also on tap. The water pollution control loan fund revenue bonds are expected to be rated triple-A by both Moody's and Standard & Poor's and will be priced by Morgan Stanley on Tuesday. The deal's structure was not available at press time.

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