This year's surge in municipal volume is set to extend to another week, propelled by water and higher education deals from California.
Issuance is estimated to come in at roughly $9.41 billion, according to Ipreo and The Bond Buyer, including $8.478 billion of negotiated deals and $933 million of competitive sales, in a week cut short by the Good Friday holiday.
If those estimates hold, it will be the 12th week in a row with supply more than $8 billion, as issuers look to take advantage of historically low interest rates.
"Through the first three weeks of March, we appear to be up about 56% in total new issue volume year over year," said Chris Mauro, director, municipal bond research at RBC Capital Markets. He said the gain has been almost entirely driven by refundings, because pure new money issuance looks to be flat year over year through the first three weeks of March.
"This calls into question that sustainability of this trend of heavy issuance that we have seen so far this year," he said. "As rates go up, most of this of this positive year-over-year variance in issuance should diminish."
Leading off the coming week's new-issue slate is the California Department of Water Resources' $765 million of water resources power revenue bonds slated to be priced by JPMorgan Securities on Wednesday. The deal is rated Aa2 by Moody's Investors Service, AA by Standard and Poor's and AA-plus by Fitch Ratings.
S&P acted a day after Fitch upgraded the credit one notch to AA-plus. Moody's affirmed its Aa2 rating March 24. All assign a stable outlook. The move by S&P affects $5.9 billion of outstanding power revenue bonds.
Citi is also expected to price the Illinois Municipal Electric Agency's $585 million revenue refunding bonds on Tuesday. The bonds are expected to mature serially from 2017 to 2035 and is rated A1 by Moody's, A by S&P and A-plus by Fitch.
The regents of the University of California are coming with $500 million of taxable general revenue bonds 2015 Series AQ on Wednesday. The university is back just weeks from having sold over $1 billion during the week on March 11. Barclays Capital is expected to be the lead bookrunner on the deal, which is rated Aa2 by Moody's and double-A by both S&P and Fitch.
Raymond James will be pricing New York City municipal water finance authority's $447.770 million of second resolution water and sewer revenue refunding bonds, with a retail order period on Monday followed by institutional pricing on Tuesday. The deal is rated Aa2 by Moody's and AA-plus by both S&P and Fitch.
Piper Jaffray is expected to price the University of Kansas hospital authority's $260 million of refunding revenue improvement bonds, it is expected to mature serially from 2015 to 2045 and is rated A-plus by S&P.
Educational issuers continue to flood into the market, after accounting for nine of the 12 largest negotiated issues last week.
"A lot of issuers are seeing the market improve and want to take advantage," said Dan Heckman, senior fixed-income strategist at U.S. Bank. "Although we have seen a lot recently, I don't see this trend continuing. The sector in general is still having a hard time getting all the approvals and everything they need to make the sale happen."
Another trend that has been occurring lately in the primary market has been downsizing of issues.
"The market is a little sloppy," Heckman said. "A lot is due to month and quarter end, as we are approaching it dealers aren't as interested in taking on inventory."
Heckman also believes that the sloppy and less firm market right now is seasonal in nature.
"The market has been outperforming or performing in line with treasuries, as it was weaker a few weeks ago and sloppier this past week," he said. "With tax payments becoming due, we see this year in and year out."
In the competitive arena, the three largest issues are scheduled for sale on Tuesday.
The state of Utah is slated to sell $224 million of Series 2015 general obligation refunding bond, which are rated triple-A by Moody's S&P and Fitch.
Bellevue, Wash., will sell $96 million of limited tax GO and refunding bonds and are rated Aa1 by Moody's and triple-A by S&P.
The Orlando Utilities Commission will offer $95 million of Series 2015A utility system revenue bonds that are rated Aa2 by Moody's and AA by S&P and Fitch.
