In what is the single-largest note deal so far this year, California will issue $8.8 billion of revenue anticipation notes this week, more than double the estimated $4.37 billion of long-term volume expected to be priced in the primary market, according to Ipreo LLC and The Bond Buyer.
The estimated volume is also half of the revised $8.66 billion in long-term financings that made their way to market last week, according to Thomson Reuters. The largest long-term deal last week was a $982 million Utah general obligation offering that had natural triple-As from all three major rating agencies and included tax-exempt bonds and taxable Build America Bonds.
The $490 million tax-exempt series had a final maturity in 2018 that carried a 5% coupon and yielded a 2.68% - 142 basis points lower in yield than the 30-year generic triple-A GO scale last Wednesday when the deal came, according to Municipal Market Data.
The $492 million BAB series had a final 2024 maturity that carried a 4.55% coupon and was priced at par and 110 basis points over comparable Treasuries.
Last Friday, the scale for 30-year triple-A GOs ended at a 4.06% yield, according to MMD.
Back in the short-term market this week, California's mammoth Ran deal arrives with a split rating and on the heels of the state's lengthy cash-flow dilemma, which culminated in the issuance of IOUS to creditors and vendors for two months.
While the Ran deal garnered the top short-term ratings of MIG-1 from Moody's Investors Service and SP-1 from Standard & Poor's, Fitch Ratings last week issued its F2 rating, two notches below its top rating of F1-plus.
JPMorgan will price the offering on Wednesday, after conducting a two-day retail order period today and tomorrow. The two-pronged deal will consist of Series A1 notes, which mature May 25, 2010, and Series A2 notes, which mature on June 23, 2010.
The state will use a portion of the proceeds to repay JPMorgan, which lent California $1.5 billion in August to allow the state to begin redeeming the IOUs.
Last Tuesday, Massachusetts sold $1.2 billion of revenue anticipation notes in a three-pronged offering in the competitive market. The 2010 notes maturing in April, May, and June, yielded 0.29%, 0.30%, and 0.31%, respectively, and were rated MIG-1 by Moody's, SP-1-plus by Standard & Poor's, and F1-plus by Fitch.
There will be very few sizable deals in the long-term new-issue market this week.
Maryland's Washington Suburban Sanitary District is planning to sell a three-pronged issue consisting of consolidated public improvement bonds totaling $270 million in the competitive market tomorrow. The deal is made up of three series of $90 million each - two tax-exempt series maturing from 2010 to 2019 and one taxable series maturing from 2020 to 2029, which is designated as BABs.
The bonds have natural triple-As from Moody's, Standard & Poor's, and Fitch.
In the Midwest, Ohio is scheduled to issue $252 million of GOs in a four-pronged deal being senior-managed by Jefferies & Co. tomorrow. The deal, which matures serially from 2010 to 2020, is rated Aa2 by Moody's, AA-plus by Standard & Poor's, and AA by Fitch.
The largest portion of the deal consists of $147.6 million of higher-education GO refunding bonds, while $80.5 million is school GOs, and $19.3 million consists of conservative project GOs. An additional $4.7 million will consist of natural resources GOs.
One of the only other sizable deals this week will be $150 million from the Miami-Dade County School District, which will sell one-year tax anticipation notes tomorrow competitively.