After a two-week climb, volume in the primary market may dip below $6 billion this week as a general obligation offering from Hawaii will lead the limited trading activity.
Volume will be affected by last week's sell-off as at least one large refunding has been placed on the day to day calendar, though yields stopped rising after Friday's employment report fell shy of analyst forecasts. Trading also will be reduced because the market is closed Tuesday for Veteran's Day.
"I think you will be flat to slightly cheaper next week to get some volume in the market," a New York trader said Friday. "Next week I anticipate a high volume of supply to take advantage of the rally today."
He said issuers planning large deals will want to come to market in the next two weeks before the Thanksgiving holiday.
This week, Ipreo LLC and The Bond Buyer report that new volume is estimated at $6.20 billion, on the heels of a revised $8.16 billion last week as reported by Thomson Reuters.
One of the larger deals that had been scheduled, a $355.35 million Wisconsin GO refunding, was placed on day-to-day status on Friday because of its sensitivity to market conditions in a rising rate climate, according to an underwriter at senior book-runner Morgan Stanley & Co.
Hawaii's $1 billion GO sale is prepped for pricing on Thursday by JPMorgan Securities, following a retail order period on Wednesday and should generate keen interest among the buy side crowd, according to the New York trader.
"Hawaii perks up the ears because they don't issue a lot," the New York trader said, adding that it will generate a lot of interest among investors.
"People like to drop it in their portfolios," he said of Hawaii and other low debt-issuing municipalities, like Alaska.
The $775.24 million tax-exempt portion consists of Series EO new-money bonds structured to mature serially from 2019 to 2034, while the Series EP tax-exempt refunding portion is structured to mature from 2019 to 2026.
The deal also includes $224.75 million of taxable debt comprised of three series.
The largest taxable series will consist of $193.86 million of GO refunding bonds in Series ES, structured to mature in 2016 and 2017, while Series EQ totals $25 million of taxable new-money bonds structured to mature from 2019 to 2034. The smallest portion is $5.89 million of Series ER GO refunding bonds slated to mature in 2015.
All of the bonds in both the tax-exempt and taxable series are rated Aa2 by Moody's Investors Service, and AA by Standard & Poor's and Fitch Ratings.
The New York City Municipal Water Finance Authority will issue $379.56 million of water and sewer system second general resolution revenue bonds in Series EE.
Ramirez & Co. will price the deal on Thursday with four term bonds maturing in 2028, 2029, 2036, and 2045.
"It's a great trading name," although demand will depend on the pricing, the New York trader said.
The Board of Regents of the University of Texas will issue $250 million of system revenue financing refunding bonds. The bonds are triple-A-rated by all three major rating agencies, and will be priced by Morgan Stanley on Wednesday with a structure that matures serially from 2015 to 2037.
The Wisconsin refunding was placed on the day-to-day calendar on Friday after originally being scheduled for pricing this week, the Morgan Stanley underwriter said. The Wisconsin bonds are rated Aa2 by Moody's and AA by the two other major rating agencies.
