It will be yet another busy week in the primary market as issuers continue to take advantage of the current low interest rate environment. Long-term municipal bond volume for the week of May 18 is expected to total roughly $9 billion, according to estimates from Ipreo and The Bond Buyer.
The estimate is comprised of $6.6 billion in negotiated deals and $2.4 billion in competitive offerings.
The biggest deal on the calendar is a $750 million issue from Florida's Citizens Property Insurance Corp. Bank of America Merrill Lynch is expected to price the Series 2015A-1 coastal account senior secured bonds on Wednesday. The issue is rated A1 by Moody's Investors Service, A-plus by Standard & Poor's and AA-minus by Fitch Ratings.
According to CPIC, the deal is tentatively structured as $750 million in bonds with maturities between three and 10 years, along with $250 million in three-year floating rate notes. The amounts and structure are subject to change at pricing.
In the competitive arena, Springfield, Mo., is selling $515 million of Series 2015 public utility refunding revenue bonds on Wednesday. The bonds are rated AA-plus by S&P and AA by Moody's.
Following the rating downgrades by Moody's and S&P, the city of Chicago is coming to market with two deals. Siebert Brandford Shank is set to price the city's $181.85 million Series 2003B general obligation project and refunding bonds on Tuesday, while Ramirez & Co. is expected to price Chicago's $172.79 million of Series 2002B GO Neighborhoods Alive 21 program bonds, also scheduled for Tuesday.
The 2002 bonds do not contain swaps, as they were terminated in 2014. The urgency in converting the bonds sooner rather than later is the impending expiration in October of several letters of credit. The city will shed three LOCs.
On May 5 and 6, the city terminated four interest-rate swaps tied to the 2003 bonds, paying $31 million in termination fees. The city tapped its short-term borrowing program to cover the payment and will eventually roll it into long-term debt.
"With these issues coming up, we will get price discovery and it will be interesting to see how it does but it is too early to tell about that right now," said a trader in the Midwest.
Elsewhere, Barclays Capital is slated to price the Port Authority of New York and New Jersey's $500 million of consolidated bonds, 191st Series on Tuesday. The issue is rated Aa3 by Moody's and AA-minus by S&P and Fitch.
According to representatives from the PANYNJ, the proceeds of these new money bonds will go towards the World Trade Center projects in general that the authority is building.
"We wanted to catch the market while rates were still low," said the authority. "A negotiated sale allows the Port Authority to time the market, build a book, and explore the most effective structuring scenario based on the Port Authority's current debt profile."
The state of Connecticut is headed back to the market, this time with $481.62 million of Series 2015C and Series 2015D bonds. Loop Capital Markets will price the issue, which will consist of $200 million in SIFMA-indexed bonds and $281.62 million of general obligation bonds. The issue is rated Aa3 by Moody's and AA by S&P, Fitch and Kroll Bond Rating Agency.
The $200 million in new money will be used as follows: $41 million for the Connecticut State University System; $38 million for State capital equipment purchases; $23 million for urban action grants; $21 million for other higher educational facilities; and the remaining $77 million for various projects, according to Sarah K. Sanders, Assistant Treasurer for Debt Management in the Connecticut State Treasurer's Office. The $280 million refunding will be used to refinance callable SIFMA Index bonds to lower rates for savings, she said.
Jefferies & Co. is expected to price Miami-Dade County, Fla.'s $481.79 million of Series 2015 water and sewer system revenue refunding bonds. The bonds are rated Aa3 by Moody's and A-plus by S&P and Fitch. The bonds are rated Aa3 by Moody's and A-plus by S&P and Fitch and expected to price for retail on Monday followed by institutional pricing on Tuesday.
Miami-Dade County has been no stranger to the muni market so far in 2015, as they have come with six issues totaling $815.7 million so far. These bonds will be refunding portions of the 2007 bonds and 2008 C bonds, according to Frank Hinton, director of the division of bond administration, for Miami-Dade County.
"We initially issued bonds for the county and come to the market for the funding of projects," Hinton said. "Thereafter the bonds will be reviewed for refunding opportunities and as long as the county's threshold of a 5% present-value savings is met, we will continue to come to market."
Hinton also said that they need to do these refundings so they can save the county a projected average of $3.4 million a year in debt services. "The expected average annual savings is important for the next series of bonds. We are aware of the needs and costs and these refundings will help us differ some of those costs," he said.
The New York City Municipal Water Finance Authority's $435 million of water and sewer system second resolution revenue bonds, Fiscal 2015 Series HH, will be priced by Barclays Capital on Tuesday after a retail order period on Monday. The bonds are rated AA-plus by S&P and AA by Moody's.
Back to the competitive market, the Virginia Public Building Authority will sell $368.39 million of public facilities revenue bonds on Tuesday. The issue is comprised of $230.31 million of Series 2015A bonds and $138.08 million of Series 2015B refunding bonds. The issue is rated Aa1 by Moody's and AA-plus by S&P and Fitch.
Also, Seattle will competitively issue $229.15 million of Series 2015 water system improvement and refunding revenue bonds on Wednesday. The issue is rated Aa1 by Moody's and AA-plus by S&P.
Yvette Shields and Shelly Sigo contributed to this article.
