Weekly volume is estimated to vault to $8.5 billion the week of Aug. 24 as mammoth sales from the New Jersey Economic Development Authority and the state of California sit atop the weekly slate, while a $750 million deal from the Puerto Rico Aqueduct and Sewer Authority looms on the day-to-day calendar.
"The week is shaping up to be relatively busy for municipal new issuance," said Alan Schankel, municipal strategist at Janney Capital Markets.
Bank of America Merrill Lynch is slated to price $2.23 billion of debt for the NJEDA in two tranches, representing the largest deal to hit the calendar to date in 2015. The offering will be priced for institutions Tuesday, following a two-day retail order period that concludes Monday.
The sales consist of $1.66 billion of Series 2015 WW and XX school facilities construction refunding bonds and $574 million of Series 2015YY taxable school facilities construction refunding bonds. The credit is rated A2 by Moody's Investors Service and A-minus by Standard & Poor's and Fitch Ratings.
Moody's recent rating report on the credit noted a negative outlook.
"The bonds are special obligations of the authority, backed by contract payments to be made by the state from its general fund," according to the report. "The A3 rating, one notch below the state's A2 general obligation rating, indicates the need for annual legislative appropriation of the contract payments. There are no remedies in the event of non-appropriation. However, debt service on 84% of the state's net tax-supported debt is subject to appropriation. The essentiality of the authority's education funding programs and the importance of maintaining access to the capital markets provide strong incentive for the state to make these appropriations."
Morgan Stanley is slated to price the state of California's $1.9 billion of various purpose general obligation and GO refunding bonds Wednesday after holding a retail order period Tuesday.
"These bonds help strengthen our communities by helping to fund the construction of roads, schools and other important infrastructure projects," state Treasurer John Chiang said in a release. "Not only are we investing in vital projects, we are also saving taxpayers' dollars by refinancing past debt by obtaining a lower interest rate, which will save the State millions of dollars."
According to the release, since taking office earlier this year, Chiang has carried out eight different refinancings that will together save taxpayers more than a billion dollars over the life of the bonds.
"We have to take advantage of our recent credit upgrades, and I encourage individual and institutional investors to get behind California and help us make this sale a success," he said.
About $1.35 billion from the sale will be used to refinance existing debt with the remaining $550 million providing permanent financing for capital facilities or other voter-approved projects and public facilities.
The deal is rated Aa3 by Moody's, AA-minus by S&P and A-plus by Fitch.
Barclays Capital is expected to price Guam's $404.87 million of Series 2015D business privilege tax refunding bonds Wednesday. The deal is rated A by S&P and A-minus by Fitch.
Barclays is also set to price the Connecticut Health and Educational Facilities Authority's $320 million of Series L revenue bonds for Quinnipiac University Thursday. The bonds are rated A3 by Moody's and A-minus by S&P.
In the competitive arena, the Cobb-Marietta Coliseum and Exhibit Hall Authority, Ga., is selling $372.55 million of Series 2015 taxable revenue bonds for the Cobb County Coliseum project Tuesday. The deal is rated triple-A by Moody's, S&P and Fitch.
"There is more than $8 billion listed for sale so far, not including the $750 million Puerto Rico Aqueduct and Sewer Authority issue (Caa3/CCC-/CC) which was scheduled for Aug. 20, but is now listed as day-to-day," said Schankel in a Friday market comment. "Despite some tweaking of security features, investor interest in the PR issue is apparently lacking, notwithstanding a reported yield as high as 10% for the 30-year maturity. Perhaps investor caution derives from the backdrop of an Aug. 1 default on the Puerto Rico Public Finance Corp. and the Commonwealth's plan to present a broad debt restructuring proposal by Sept. 1."
The sale of PRASA's Series 2015A senior lien revenue bond sale would be the first for a Puerto Rico authority since the commonwealth sold $3.5 billion of general obligation bonds last year..
