Volume Hovers at $5 Billion; GOs Lead New-Issue Activity

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Amid heightened demand for municipals and volume estimated to remain around $5 billion this week, competitive sales will dominate new-issue activity with a pair of Maryland general obligation offerings and an Alabama GO sale.

Competitive note offerings in Texas and Florida will arrive in the short-term market.

"Despite all the limited negative press surrounding [Puerto Rico], along with the continuously slow-moving train wreck in Detroit, municipal demand has been resilient," said Peter Delahunt, managing director of the municipal bond department at Raymond James & Associates Inc.

"Inflows to the funds have returned after a previous week of outflows," Delahunt noted.

Ipreo LLC and The Bond Buyer estimate that $5.60 billion of new supply will be priced this week, following last week's revised $5.23 billion as reported by Thomson Reuters.

At the end of trading Friday, the benchmark triple-A GO scale in 2044 ended at a 3.31%, down nine basis points from where it started last Monday, according to Municipal Market Data.

This week, Maryland's GO sales are triple-A-rated by all three major rating agencies and will be offered Wednesday as $379.74 million and $400 million series.

Another $100 million of Maryland GOs will be priced on Thursday for retail investors by Citigroup with term bonds due in 2018 and 2021.

Alabama will sell its GO deal on Thursday with serial bonds maturing from 2017 to 2026.

Elsewhere in the negotiated market, the New Mexico Municipal Energy Acquisition Authority will ells $722.19 million of revenue refunding bonds.

The bonds are rated Aa3 by Moody's Investors Service and are structured with serial bonds from 2015 to 2019, with a put bond in 2019.

Last week's largest deal, a $1.4 billion Bay Area Toll Authority revenue sale was snapped up as investors were attracted to its unique put feature and structure.

Houston, Texas, will sell a $300 million sale of public improvement refunding GOs scheduled for pricing on Tuesday by Mesirow Financial Inc.

The bonds are rated AA-plus by Standard & Poor's.

In the short-term market, the one-year note deals will consist of $310 million of tax anticipation notes from the Miami-Dade County, Fla., School District, and $225 million Harris County, Tex., TANs rated F1-plus by Fitch Ratings.

Both deals are slated for pricing on Tuesday.

"I'm sure they will be well subscribed," said a Tennessee trader judging by strong demand for recent Colorado and California note deals.

"Overall investors continue to have cash and have to put that money to work," he said on Friday. "With all this trouble in the world and Puerto Rico you should probably see a little more cash coming into the short end."

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