Seasonal Sluggishness Curtails New Volume to $4.19 Billion

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New-issue volume is expected to decline by around $2 billion this week, as a handful of deals from California, the District of Columbia and Illinois will vie for investors' attention.

Ipreo LLC and The Bond Buyer estimate that volume will shrink to $4.19 billion, down from a revised $6.16 billion that was priced last week according to Thomson Reuters.

The summer doldrums — the period typically seen when volume tapers off in late July and August as investors are preoccupied with summer vacations — began last week, according to John Gibson, senior vice president of trading at The GMS Group headquartered in Livingston, N.J.

"It's a very slow time right now, and I'm sure next week's going to be the same," he said on Friday.

A $744.29 million revenue sale from the Trustees of the California State University will lead the slate of new offerings.

Gibson said last Thursday's $107.5 million Oyster Bay general obligation offering was the most sought-after deal in the New York competitive market due to its Assured Guaranty Corp. enhancement.

Won by Citigroup Global Markets, the yields ranged from 0.85% with a 3.25% coupon in 2015, to 3.90% with a 4% coupon in 2031. The bonds have an option call in 2022 at par, and are rated BBB by Standard & Poor's.

On Friday, the benchmark triple-A GO scale in 2044 ended at a 3.24%, after yields weakened last Thursday on the heels of a seven-day rally, according to Municipal Market Data.

Rick Marrone, managing director of the fixed-income group at Thomas Weisel Capital Management, said the imbalance of supply and demand contributed to the market grinding higher on a "thinly-traded typical summer Friday."

"There is more cash than bonds," he said.

Gibson agreed that the market is in a summer holding pattern.

"I think people are expecting higher rates, but with no issuance and a lack of anything else going on we are remaining in a very tight range right now," he explained.

The biggest decrease in volume will be felt in the competitive market, where an estimated $515.1 million will pale in comparison to last week's revised $2.42 billion, according to Thomson Reuters' data.

Meanwhile, volume will remain relatively steady in the negotiated market as this week's estimated $3.68 billion mirrors the previous week's revised $3.70 billion.

This week's California State University deal, which is being senior-managed by Barclays Capital, will be priced for retail investors on Wednesday ahead of the institutional pricing on Thursday.

Meanwhile, George Washington University is planning to sell $300 million of taxable debt in a Barclays-managed deal planned for Tuesday and structured with a single 30-year term bond.

A $285 million sale of sports facilities refunding bonds from the Illinois Sports Facilities Authority is slated for pricing by Barclays on Wednesday.

The bonds, which are backed by state taxes, are rated A by Standard & Poor's and BBB-plus by Fitch Ratings.

In the Southwest, San Antonio, Texas, is expected to issue $230.6 million of triple-A-rated general improvement refunding bonds in a Piper Jaffray Inc.-led deal on Tuesday.

Elsewhere in the negotiated market, Suffolk, Va., will bring $124.74 million of GO bonds to the market on Wednesday. The bonds are rated Aa1 by Moody's Investors Service, AAA by Standard & Poor's and AA-plus by Fitch.

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