The $722.9 million New Mexico Municipal Energy Acquisition Authority gas supply revenue refunding bonds are grabbing investors focus this week because of the deal's size and because there are not many New Mexico bonds in the market.
The deal is the largest scheduled on the negotiated calendar for the week, and are expected to be priced by RBC Capital Markets on Tuesday.
The bonds' attractiveness is boosted because New Mexico's issuance this year is down 24.7% as of June 30 compared to the same period last year, according to data provided by The Bond Buyer and Ipreo.
"You don't see New Mexico paper that often, so it will be a diversifier," a trader in New York said. "People are still hungry for anything in the primary after that drought around the July fourth holiday."
New Mexico's total issuance as of July 30 is $859.7 million, compared to $1.14 billion as of the same date in 2013.
The bonds are also appealing because as gas supply bonds, they fall under the "essential need" category. Market participants have said that essential need bonds are attractive this year because they can see where the money is going.
Utility bond issuance have been down this year too, totaling $14.61 billion as of June 30, 21.4% lower than the $18.58 billion they totaled during the same period in 2013.
The bonds earned an Aa3 from Moody's Investors Service.
The second and third largest negotiated issuances are also expected to price on Tuesday. Oregon's Beaverton School District 48J is scheduled to issue $383.57 million in a two part issuance consisting of $26.1 million general obligation tax-exempt deferred interest bonds and $357.5 general obligation tax-exempt current interest bonds.
Piper Jaffray is the lead underwriter on the deal, and the bonds received Aa1 from Moody's and AA-plus from Standard & Poor's.
Houston is expected to issue $300 million GOs on Tuesday that will be priced by Mesirow Financial.
Besides the three top negotiated deals, Wells Fargo Securities will sell $155.4 million Utah County Hospital revenue health service bonds that have a 2045 term bond, and earned Aa1 and AA-plus ratings from Moody's and S&P respectively.
In the competitive market the $213.9 million Florida Department of Transportation turnpike revenue bonds scheduled for auction on Tuesday may give investors an opportunity to buy transportation bonds at a bit higher yield, according to the trader in New York.
The bonds were rated Aa3 by Moody's and AA-minus by S&P and Fitch Ratings.
The Boston Water and Sewer Commission will sell $100 million general revenue bonds that carry an Aa1 from Moody's, and AA-plus from S&P and Fitch.
