A trio of financings from California, Georgia, and New York will lead the primary market as the first quarter winds down with another week of meagre supply.
According to Ipreo LLC and The Bond Buyer, $4.66 billion in new volume is estimated to be priced by issuers this week. Last week, volume fell to a revised $3.17 billion on the heels of the $11 billion bounty the week of March 10.
Volume has declined by 33.4% in January and 40.4% in February - the lowest for the month since 2000, according to Thomson Reuters. The lack of supply helped municipals "maintain a relatively firm tone in the face of rising Treasury yields," Triet Nguyen, managing partner at Axios Advisors LLC, wrote in a weekly report on Wednesday.
This week's largest pricing will be a $793 million sale of lease revenue bonds from the California State Public Works Board scheduled for pricing by Morgan Stanley & Co. on Wednesday after a retail order period on Tuesday.
Although the structure was not available at press time, the deal consists of lease revenue bonds to finance Department of Corrections and Rehabilitation projects and is rated A2 by Moody's Investors Service and A-minus by Standard & Poor's and Fitch Ratings.
The deal should be well sought after given the overall supply drought in the municipal market and the recent economic improvements in California, municipal traders said. The 30-day visible supply for the municipal market is hovering around $6.29 billion, according to data compiled by The Bond Buyer.
Elsewhere in California, the Anaheim Public Financing Authority is gearing up to sell $265 million of lease revenue bonds on behalf of the Anaheim Convention Center.
The bonds, which are slated to be priced by Citi on Tuesday, will consist of $258 million of tax-exempt bonds maturing serially from 2015 to 2034, with a term bond in 2039 and 2046, as well as $7 million of taxable bonds maturing in 2015 and 2016.
The bonds are rated AA-minus by Standard & Poor's and Fitch.
Atlanta will sell $705 million of airport revenue bonds on Tuesday in a negotiated deal led by Siebert Brandford Shank & Co.
Serial bonds are slated to mature from 2015 to 2033. Series 2014 A includes $376 million of passenger facility charge and subordinate lien general revenue refunding bonds, while Series 2014 B consists of $144 million of airport general revenue refunding bonds. Series 2014 C includes $185 million of airport general revenue refunding bonds subject to the alternative minimum tax.
The Series A bonds are rated A1 by Moody's, A-plus by Standard & Poor's, and A by Fitch Ratings, and Series B and C are rated Aa3 by Moody's, A-plus by Standard & Poor's and A-plus by Fitch.
In addition, the New York City Municipal Water Finance Authority is planning to sell $480 million of water and sewer system second general resolution revenue bonds in a Barclays Capital-led deal slated for pricing on Tuesday.
The 2014 Series DD bonds - which will mature from 2022 to 2025 and in 2034 and 2035, with a term maturity in 2039 - will be offered to retail investors on Monday ahead of the official pricing.
The bonds are rated Aa2 by Moody's and AA-plus by the other two major rating agencies.
The N.Y.C. deal should gain attention from investors since the water and sewer sector is currently attractive and offers relative value, and has also underperformed the broader market in the past month, according to Barclays Capital research report by analysts Thomas Weyl, Ming Zhang, and Sarah Xue last week.
"We are constructive on the essential nature of the services provided as well as the special revenue status of the some of the bonds," the analysts wrote.
One of the other large deals of the week include a $238 million Orlando, Fla., contract tourist development tax payment revenue bonds scheduled for pricing on Thursday by Bank of America-Merrill Lynch & Co.
The bonds are rated Aa2 by Moody's and AA-plus by Standard & Poor's.
The upcoming deals should bode well for investors looking for value on the long end of the yield curve.
"Long munis have outperformed over the past month, but we continue to see the best relative value at the long end given the rich valuations at the short to intermediate part of the curve," the Barclays analysts wrote.
