Sound Transit, Minnesota Offers Lead a $7.8B Week

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Municipal volume is expected to spike to $7.8 billion for the week of Aug. 3, with an almost billion dollar deal coming from the Pacific Northwest and five separate competitive issues from Minnesota totaling more than $1 billion.

The forecast weekly volume, as estimated by Ipreo and The Bond Buyer, includes $5.6 billion of negotiated deals and $2.2 billion of competitive sales. That compares with total sales of $4.59 billion in the past week, according to Thomson Reuters.

"New issue volume hedged higher in July and that is reflective of better market conditions, as issuers were more comfortable coming into the market," said Jim Grabovac, managing director and senior portfolio manager at McDonnell Investment Management LLC.

The competitive slate is dominated by the five deals from the state of Minnesota.

Scheduled to sell on Wednesday, the offering consists of $386.50 million of Series 2015D general obligation state various purpose refunding bonds; $376.11 million of Series 2015A GO state various purpose refunding bonds; $310 million of Series 2015B GO state trunk highway bonds; $14.89 million of Series 2015E GO state trunk highway refunding bonds; and $7.2 million of Series 2015C taxable GO state various purpose bonds.

The largest negotiated deal on the calendar is a $923.84 million green bond sale from Sound Transit, the Central Puget Sound Regional Transit Authority, Wash. The sales tax improvement bonds are slated to be priced by JPMorgan on Tuesday, and are initially structured as Series 2015S-1 green bonds and Series 2015S-2 green bonds. The issue is initially structured as serials running from 2018 through 2050. The issue is rated Aa2 by Moody's and triple-A by S&P.

According to the official statement, the sound transit has designated the 2015 parity bonds are "green bonds" based on the planned use of the proceeds to finance or refinance project that adhere to the Sound Transit's sustainability plan, such as reducing car trips by carrying more transit riders, supporting smart regional growth, fostering transit-oriented development and improved transit access, designing and building greener projects and operating fleets and facilities more efficiently.

"The upcoming weeks' sales should go well; there are strong names and lots of demand," said Dawn Mangerson, managing director and senior portfolio manager at McDonnell Investment Management. "The appetite for paper continues to be there."

Citigroup is expected to price the New York State Environmental Facilities Corp.'s $370 million of Series 2015D state revolving funds revenue bonds on Wednesday after a one-day retail order period. The issue is initially structured as serials running from 2016 through 2035, with a term in 2040. The bonds are rated triple-A by Moody's, S&P and Fitch.

"Issuers are more influenced by market tone instead of potential liftoff, so a rise in rates might not be a driving factor," she said. "However there could be a few more refunding issues coming into the market if rates where they are."

Grabovac said we are into the dog days of summer, and August will be a slower month, but that there is no reason to think the market won't surpass the $400 billion mark by years end.

"If we just run even with last year for the rest of this year, we will comfortably get ahead for $400 billion plateau, for the first time since 2010."

 

 

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