The arrival of a billion-dollar deal from Florida along with large utility offerings this week will keep the primary market busy despite the abbreviated trading in observance of Memorial Day yesterday. However, new-issue volume at the end of May won't be much higher than it was at the start of the month.
In the first full week of May, the primary market saw $6.5 billion of new volume, according to Thomson Reuters. This week, at the end of the month, an estimated $6.58 billion of new-issue volume is expected, compared with a revised $7.71 billion last week.
The Citizens Property Insurance Corp. in Florida will issue the largest deal of the week when it sells at least $1.5 billion of senior-secured bonds. Goldman, Sachs & Co. will price the sale on Thursday, following a retail order period tomorrow.
The bonds will be structured on the short end of the market with maturities available in 2011, 2012, and 2013. Part of the deal will be insured by Financial Security Assurance, although other insurers are being considered. The bonds have underlying rating of A2 from Moody's Investors Service, and A-plus from Standard & Poor's.
The North Texas Tollway Authority Friday decided to postpone $1 billion of revenue funding bonds that Lehman Brothers had been scheduled to price Thursday. The deal was expected to be weighted on the long end of the market, with maturities anticipated between 2030 and 2038, and the bonds are expected to be rated A3 by Moody's and BBB-plus by Standard & Poor's.
A pair of California and New York municipalities will round out the largest deals of the week, when they issue more than $1 billion in two separate utility issues.
The Sacramento Municipal Utility District is slated to sell $503.5 million of electric revenue refunding bonds in a deal that will be priced by Goldman for institutions on Thursday after a retail order period tomorrow. The 2008 Series U bonds are expected to be rated A1 by Moody's and A by Standard & Poor's and Fitch Ratings, although insurance is being considered. The bonds are structured to mature from 2013 to 2027.
In the Northeast, the New York City Municipal Water Finance Authority is expected to sell $500 million of water and sewer system second-general resolution revenue bonds.
The fiscal 2008 Series DD bonds will be priced by Siebert Brandford Shank & Co. tomorrow in a structure that consists of 2032, 2036, and 2039. The deal is expected to be rated Aa3 by Moody's and AA by Standard & Poor's and Fitch.
Sherman Swanson, managing director of underwriting and trading at Siebert, said the deal should be well received because of its timing.
"It's a good time of the year, with June and July interest payments coming due and the decent retail appetite in the market as well," he said.
One of the other sizable deals of the week includes a $425 million sale from the Phoenix Civic Improvement Corp. on behalf of Phoenix Sky Harbor International Airport.
Structured with serial and term bonds, the deal will consist of debt subject to the alternative minimum tax as well as non-AMT bonds, and will be priced on Thursday by Lehman.
There will be much less for investors to choose from, however, in the competitive market this week.
One of the very few sizable deals include a two-pronged sale of general obligation bonds from Romeoville Village, Ill., which is scheduled for competitive bidding tomorrow.
The deal consists of $108 million of GO refunding debt maturing from 2021 to 2037, and $10.8 million of GO debt maturing from 2009 to 2020. Both series are expected to carry underlying ratings of A2 from Moody's and A-plus from Fitch, and are also insured by Assured Guaranty Corp.
In addition, a $111.4 million sale of certificates of participation from the Duluth, Minn., Independent School District is planned for competitive bidding Thursday. The structure and the ratings for the deals were not available at press time.
