Municipal bond volume is forecast to decline 57% as a holiday-shortened week brings the second quarter to a close.
New issuance for the week of June 29 is estimated at $3.3 billion, according to Ipreo and The Bond Buyer, down from a revised $7.52 billion that priced during the week of June 22, according to Thomson Reuters.
About $2.8 billion of the volume will come from negotiated deals. The largest deal of the week is the Texas Transportation Commission's $800 million of state highway fund's first tier revenue refunding bonds, which will be priced by Citi on Tuesday. The deal is expected to mature serially from 2017-2026.
This is the first issue since the Legislature approved a record funding increase for highway projects earlier this year. Proceeds of this sale will refund outstanding bonds without extending final maturities. The present value savings from the lower interest cost is expected to exceed 8%, according to officials from the Texas Department of Transportation.
"The State Highway Fund is a very strong credit and has typically received strong demand from investors," said TxDOT chief financial officer James Bass. "Despite some recent market volatility, we remain in a very favorable interest rate environment from a historical perspective. Given the strong AAA/Aaa credit ratings of the State Highway Fund Revenue financing program, the Commission, TxDOT and our banking team expect broad investor participation and a successful pricing."
The issue backed by the State Highway Fund comes after a record year for issues from the TTC that produced record savings. This deal is a revenue bond, but the debt carries the state's triple-A rating from Moody's Investors Service and Standard & Poor's.
"Given the first-tier revenue bonds (and existing parity debt) have a rating above the sovereign rating of the U.S., we view the pledged revenue stream as having the ability to maintain stronger credit characteristics than the sovereign in a stress scenario," S&P analyst Kate Choban wrote.
The State Highway Fund gets revenue from the state fuel tax, registration fees and other income.
Morgan Stanley is set to price the Metropolitan Washington Airports Authority's $350 million of Series 2015 B, C and D airport system revenue and refunding bonds on Tuesday. The issue is rated A1 by Moody's and AA-minus by S&P and Fitch Ratings.
Morgan Stanley is also expected to price the state of Arizona's $168 million of Series 2015 refunding certificates of participation on Tuesday. The COPs are rated Aa3 by Moody's and AA-minus by S&P.
Jefferies is slated to price the Jets Stadium Finance Issuer 2015, LLC's $147 million of Series 2015 taxable weekly mode variable-rate demand notes on Tuesday. The notes are rated VMIG1 by Moody's and A1 by S&P.
Wells Fargo Securities is set to price Clark County, Nev.'s $102 million of revenue refunding bonds for the Las Vegas-McCarran International Airport on Tuesday. The bonds, initially structured as serials running from 2019 through 2027, are rated A1 by Moody's and A-plus by S&P.
The only competitive bond sale over $100 million will take place on Tuesday, when the North Dakota Public Finance Authority offers $125 million of Series 2015A revolving fund program bonds.
