A trio of sizable financings from issuers in California, as well as a large Georgia offering, will be the largest deals to usher in the first full trading week of May as the primary market anticipates an estimated $5.46 billion in total new issuance this week, according to Ipreo LLC and The Bond Buyer. The issuance comes on the heels of a revised total of $3.62 billion last week, according to Thomson Reuters.
The flurry of California deals will be anchored by a $442 million sale of senior sewer revenue bonds by the San Diego Public Facilities Financing Authority on Wednesday, following a retail order period tomorrow by senior book-runner Banc of America Securities LLC.
The deal will be rated Aa2 by Moody's Investors Service, A-plus by Standard & Poor's, and AA-minus by Fitch Ratings.
In addition, Vernon, Calif., is planning to issue $424 million of electric system revenue bonds also on Wednesday in a negotiated deal being led and priced by Citi.
Structured to mature serially from 2009 to 2021, the bonds are expected to be rated Aa3 by Moody's and A-minus by Standard & Poor's.
The Sacramento Municipal Utility District, meanwhile, is also planning to enter the market with a $200 million sale of electric revenue bonds slated to be priced either tomorrow or Wednesday by Goldman, Sachs & Co. The deal will contain a 2036 bullet maturity and is expected to be rated A1 by Moody's, A-plus by Standard & Poor's, and A by Fitch.
In the Southeast, the state of Georgia will boost supply with $314.5 million of general obligation bonds, which are expected to be priced by Merrill Lynch & Co. tomorrow after a one-day retail order period today. The state's GO credit is rated triple-A by all three rating agencies.
While there seems to be a temporary lull in mammoth-sized deals featuring Build America Bonds this week, some smaller offerings containing BABs might make an appearance.
The Southern Illinois University is hoping to come to market on Thursday with a $54 million sale of revenue debt that includes taxable BABs. Currently, the deal tentatively consists of $6 million of tax-exempt bonds in Series A1, which is bank-qualified, and $48 million of taxable BABs in Series A2, both of which mature out to 2030.
Changes in interest rates or spreads in the tax-exempt or taxable markets could impact the size of each series, according to John Vincent, principle at John S. Vincent & Co., the university's financial adviser.
"If there are shifts between those two markets we could end up with more tax-exempt bonds or more taxable bonds," he said Friday.
The deal is being priced by BMO Capital Markets and has underlying ratings of A1 from Moody's and A-plus from Standard & Poor's. The university has applied for insurance on the new deal, and Vincent said they expect to hear from insurers tomorrow.
This week's slate compares to last week when the largest deal was a $1.64 billion sale of revenue bonds from Florida's Citizens Property Insurance Corp.
Goldman priced the deal for retail investors last Wednesday and for institutions last Thursday with an uninsured 2017 final maturity with a split coupon of 51/2% and 6% - both of which yielded 5.70%.
The bonds were rated Aa2 by Moody's and AAA by Standard & Poor's and Fitch. At the time, the natural triple-A GO scale in 2017 yielded 2.52%, while the AA GO scale yielded 2.74%, and the insured scale yielded 3.26%, according to Municipal Market Data.
In addition, a $590.5 million health care offering on behalf of Catholic Healthcare West, was priced by JPMorgan with a final maturity in 2039 that carried a 6% coupon, and was lowered by three basis points to yield 6.15% in Series 2009 A issued by the California Health Facilities Financing Authority. However, not all of last week's deals were priced as planned.
A $350 million New Jersey Transportation Trust Fund Authority revenue sale was priced by Merrill on Monday for retail investors, but the next day the institutional pricing was postponed. A spokesman for the state treasurer's office said the delay was decided "in the best interest of the issuer and investors."
A source at Merrill on Friday said the deal remains on the day-to-day calendar and there were no further details on its pending return to the market.
The deal includes $170 million of current interest bonds maturing from 2029 to 2031, $90 million of capital appreciation bonds maturing from 2032 to 2034 and in 2036, 2038, and in 2039, as well as $90 million of convertible bonds maturing only in 2039.
