A handful of large revenue offerings are on tap this week amid $8.8 billion of estimated new volume, the largest new issuance prediction in four months.
The last time volume was predicted to be higher was the week of June 23 when Ipreo LLC and The Bond Buyer called for an estimated $8.9 billion of new issue supply, but actual volume for that week was later revised to $7.6 billion as reported by Thomson Reuters.
This week's activity will be led by a $700 million New York City Transitional Finance Authority sale of future tax secured bonds and a $500 million North Texas Tollway Authority sale of first and second tier bonds -- the two largest negotiated deals.
According to Ipreo and The Bond Buyer, the deals will be part of the estimated $8.8 billion expected to be priced by issuers this week on the heels of a revised $6.60 billion that actually came to market last week as reported by Thomson.
"Next week is shaping up like last week," said Fred Yosca, head of fixed income trading at BNY Mellon Capital Markets LLC. "Going into the week you saw a growing calendar, but you were losing buyer interest and had a waning bid side."
"If that continues, you'll see deals getting priced at a substantial discount to the secondary market to get them done," he said in an interview on Friday.
He said the market is still recovering from what he called a "manic Wednesday" two weeks ago. "It's been pretty rough sledding since then," he said.
"We had a respite a week ago and business started coming in again, but that seemed to have run out of gas in the last couple of days," he said.
The New York City TFA deal will lead off the activity when it is priced by Barclays Capital Inc. on Wednesday following a two-day retail order period. The subordinate bonds, which are rated Aa1 by Moody's Investors Service and AAA by Standard & Poor's and Fitch Ratings, are tax-exempt and tentatively structured to mature serially from 2016 to 2034 with term bonds in 2039 and 2042.
"It's a name that there's always a secondary float in, and a bond that trades with a reliable range of spread to the benchmark," a New York trader said.
"If you needed to price a TFA deal with size and terms out long, which this deal is, it's easy to do," he said.
He said the deal could be priced anywhere from 25 to 30 basis points above the Municipal Market Data curve, which he referred to as "cutting edge," to 35 to 40 basis points, which he called a "blow-out" - or somewhere in the middle.
The Texas toll deal consists of $350 million of first tier Series 2014 A bonds rated A2 by Moody's and A by Standard & Poor's and maturing from 2019 to 2025, and $149 million of second tier Series 2014 B bonds rated A3 by Moody's and BBB-plus by Standard & Poor's and maturing in 2030 and 2031.
The toll offering will be priced by Bank of America Merrill Lynch & Co. on Wednesday.
In the competitive market, the District of Columbia will issue $400 million of tax and revenue anticipation notes on Wednesday. The notes are rated SP1-plus by Standard & Poor's and F1-plus by Fitch Rating.
In addition, North Carolina will competitively sell $295.29 million of limited obligation refunding bonds rated Aa1 by Moody's, AA by Standard & Poor's, and AA-plus by Fitch and structured to mature from 2015 to 2028.
Among the other large deals planned this week, the Missouri Health and Educational Facilities Authority is gearing up to issue $350 million of health facilities revenue bonds on behalf of Mercy Health.
Rated Aa3 by Moody's and AA-minus by Standard & Poor's, the deal will be priced on Tuesday by Bank of America Merrill, however, the structure was not yet available at press time.
