For the third week in a row, a California issuer will dominate the primary market spotlight with a $1.5 billion financing.
However, activity within the rest of the new-issue market is expected to be relatively light as evidenced by an estimated $5.65 billion of new long-term volume, according to Ipreo LLC and The Bond Buyer, noticeably less than last week’s nearly $9 billion bounty.
A revised $8.97 billion of new, long-term volume surfaced last week, according to Thomson Reuters, at which time the California market commanded keen attention from investors for the second week in a row.
The state last week sold $1.4 billion of traditional tax-exempt, long-term general obligation bonds — without a taxable Build America Bond component — in order to cater to retail investors craving non-BAB debt on the long end of the market, according to underwriters at senior manager E.J. De La Rosa & Co. in Los Angeles.
The Golden State also dominated the primary calendar the week of Oct. 26 when it sold $3 billion of sales tax-backed economic recovery refunding bonds; the Bay Area Toll Authority sold $1.3 billion of revenue bonds in what marked the authority’s first-ever BAB sale; and the California Health Facilities Finance Authority sold $569 million on behalf of Catholic Healthcare West.
Looking ahead to this week, the largest deal on the negotiated calendar is a $1.5 billion revenue sale from the California Statewide Communities Development Authority that will account for roughly one-third of the $4.31 billion of long-term negotiated volume estimated by Thomson Reuters.
Underwriters at Goldman, Sachs & Co. today will conclude a two-day retail order period, which began last Friday, and expect to officially price the deal for institutions tomorrow with a single maturity due in 2013.
The bonds are rated Baa1 by Moody’s Investors Service, A by Standard & Poor’s, and BBB by Fitch Ratings. The California Proposition 1A Receivables Program revenue bonds are being issued to securitize the state government’s promise to repay money it is borrowing from local governments to help balance this year’s budget.
Proposition 1A was a 2004 ballot measure driven by local governments tired of seeing their coffers raided to patch the state’s deficit. It was designed to make it more difficult for the state to borrow from localities and to be more structured and organized when it does.
Meanwhile, in the Texas market, two of the largest deals on the negotiated calendar are a $377.6 million health care revenue offering on behalf of Christus Health, a Catholic health care system headquartered in Irving, Tex., as well as a $183.7 million school bond issue structured as BABs.
The Texas health care deal is a remarketing of three older bond issues — Series 2005 A3-A6; Series 2005 B2, and Series 2005 C3 — and will be issued jointly by the Harris County Health Facilities Development Corp., the Coastal Bend Health Facilities Development Corp., and the Louisiana Public Facilities Authority.
The deal is set to be priced by Goldman tomorrow, following a one-day retail order period today. It is rated A1 by Moody’s and A-plus by Standard & Poor’s. The structure of the deal was not available at press time.
The Texas school deal will be issued by the Houston Independent School District and consists of taxable, direct-pay schoolhouse BABs that will be priced today by RBC Capital Markets.
The bonds, which are rated Aa2 by Moody’s, and AA-plus by Standard & Poor’s, are structured to mature serially from 2019 to 2021 with term bonds available in 2024 and 2028.
In the competitive market, a $236.9 million sale of educational facilities revenue bonds from the Virginia College Building Authority is expected to be reoffered tomorrow with a structure that includes serial bonds maturing from 2010 to 2039. The bonds are rated Aa1 by Moody’s, and AA-plus by Fitch.
In the New York market, meanwhile, a three-pronged offering is on tap from the Suffolk County Water Authority today. The deal is rated AA-plus by Standard & Poor’s and Fitch. It consists of $100 million of traditional taxable bonds maturing from 2033 to 2035; $66 million of tax-exempt revenue bonds maturing from 2011 to 2035; and $14.1 million of tax-exempt revenue refunding bonds maturing from 2011 to 2022.
Aside from the activity in the long-term market, a pair of sizable note deals will be priced in the short-term market this week — the largest of which is a $600 million Connecticut general obligation note deal to finance the state’s fiscal 2009 budget deficit. Institutional sales begin tomorrow following a two-day retail order period that began on Friday.
In addition, $165.4 million of certificate of anticipation notes from the Orange County, Calif., Sanitary District will sell tomorrow.
