A pair of large state general obligation offerings will pump a generous amount of new volume into the municipal market this week where more than $4 billion in new volume is expected to be priced on the heels of a brisk, and mostly stronger holiday-shortened trading session last Thursday — a day before the long, three-day Easter holiday weekend.
Yields on triple-A-rated 10-year bonds ended unchanged at 1.91%, while yields on 30-year triple-A GOs finished flat at 3.09%, according to Municipal Market Data.
An estimated $4.93 billion is expected to usher in this week, according to The Bond Buyer and Ipreo LLC, compared to a revised $2.72 billion that was priced last week.
A $950 million sale of Pennsylvania GOs and an $800 million Illinois GO financing will pair up to headline the activity in the competitive primary market.
Both deals will be bid on Tuesday. The Pennsylvania deal will consist of serial bonds maturing from 2014 to 2033, while the Illinois financing will come in two series — $450 million of tax-exempt bonds in Series A and $350 million of taxable bonds in Series B, both of which mature serially from 2014 to 2038.
The Illinois deal will enter the market amid a cloud of financial turmoil which forced the postponement of bonds earlier this year. Along with a backlog of unpaid bills, totaling about $5 billion at the end of fiscal 2012, Illinois has an unfunded liability of $96.7 billion for five state pension plans.
Illinois GOs are rated A by Fitch, which also affirmed the A rating on approximately $26.3 billion of outstanding GO bonds and put the state on negative watch. The deal is also rated A2 by Moody’s, with a negative outlook, amid pension liability concerns.
The money will be used for schools and other capital projects. The deal includes some of the debt Illinois intended to sell on January 25.
Meanwhile, a $380.79 million enhanced tobacco settlement, asset-backed financing from the Golden State Tobacco Securitization Corp. will lead off the negotiated activity on Tuesday when the deal is priced by Barclays Capital. The deal is structured with serials bonds maturing from 2017 to 2021 with term bonds in 2029 and 2030. The limited obligations of the corporation are secured by tobacco settlement revenues and other pledged receipts and are rated A2 by Moody’s Investors Service, A-minus by Standard & Poor’s, and BBB-plus by Fitch Ratings.
In other sizable negotiated activity, the Charleston County, S.C., School District in South Carolina will issue $351.33 million of double-A-rated general obligation bonds in a Well Fargo Securities-led financing.
The bonds, which are rated Aa3 by Moody’s and AA by Standard & Poor’s, will mature serially from 2018 to 2030.
Switching gears to the Midwest region, the Missouri Health & Educational Facilities Authority will bring a $203.93 million revenue sale on behalf of CoxHealth for major expansion of its acute care center. Rated A2 by Moody’s and A by Standard & Poor’s and Fitch, the bonds will be priced by Bank of America Merrill Lynch on Wednesday with a structure that includes serial bonds maturing from 2014 to 2028, and term bonds in 2033, 2043, and 2048. Fitch removed it from negative watch ahead of the pricing.
Back in the Far West region, Oregon is on tap to sell $202 million of lottery revenue bonds in a two-pronged deal slated for pricing on Wednesday by Citi.
Rated Aa2 by Moody’s and AAA by Standard & Poor’s, the deal is comprised of a $122 million Series A tax-exempt portion, and an $80 million Series B & C taxable series.
Nearby, the California Statewide Communities Development Authority is gearing up to sell $196 million of single-A-rated pollution control refunding revenue bonds on behalf of the Southern California Edison Co. JPMorgan is slated to price the put deal on Tuesday, however the maturity for the put was still being determined at press time. The bonds are rated A1 by Moody’s, A by Standard & Poor’s, and A-plus by Fitch. One of the only other somewhat sizable deals pricing in the region is a $148 million Nevada sale of higher education university revenue bonds expected to be priced competitively on Wednesday in two series.
Rated Aa2 by Moody’s and AA-minus by Standard & Poor’s, the deal will consist of three series — $39.9 million in Series A maturing from 2014 to 2033; $100.2 million in Series B maturing 2014 to 2035; and $7.83 million in a Series C taxable portion maturing from 2014 to 2020.
