Market participants anticipate that the $285 million Illinois Sports Facility Authority refunding bonds deal will bring extra spread to the market on Thursday.
"The Illinois deal is the most interesting deal coming to market today," a New York trader said. "There's a split in the rating. Some view the deal as a state appropriation. There's pretty good coverage going in. Some of the series has insurance on it, which helps with liquidity."
Traders are expecting the state tax-supported deal to be in high demand since the issuer does not frequently enter the market.
Bonds maturing between 2026 through 2032, which is the latest maturity, are backed by Assured Guaranty insurance.
"Insurance helps make the deal attractive," the New York trader said. "It's a novelty issuer and with rates so low people are grasping for anything with extra spread. There are enticing spreads with or without the insurance."
Barclay's Capital is the lead underwriter. The deal's rating is split between an A from Standard & Poor's and a BBB-plus from Fitch Ratings.
Traders predicted that if Moody's Investors Service had given the credit a rating it would be similar to the rating it received from Fitch, though traders said that, "S&P's rating holds more weight than Fitch.
Barclay's Capital will also price $744.2 million of California State University Trustee revenue bonds on Thursday, the largest deal of the week.
"It's a big deal and funding from the state in the short term has stabilized," the trader said. "There are some concerns because the deal relies on the state to back it up. It's a high tax state and there's always demand for and need for Cali paper."
The deal is rated AA-minus by S&P.
Wells Fargo will price a two-part deal totaling $143.5 million of Austin Independent School District tax refunding bonds. The deal is rated AAA by Moody's and AA-plus by both S&P and Fitch.
"A part of the deal has its own backing on it, which is very strong," the trader said. "Austin's economy is doing well and growing like other parts of Texas, anchoring from the military and universities. It's a secure investment."
Bosc will market $113 million of Manor Independent School District, Texas, general obligation bonds. The deal is rated Aaa by Moody's.
