With underwriters and investors still buzzing about last week's historic Build America Bond blitz in California, the municipal market is gearing up for the arrival of another significant slate - highlighted by $2 billion of Florida bonds - that will bring an estimated $6.28 billion in total issuance to the market in the last week of April, according to Ipreo and The Bond Buyer.
The estimated figure pales in comparison to the revised $12.67 billion in new supply that flooded the market last week. It was dominated by the mammoth sale of California's $6.85 billion taxable general obligation deal that included $5.23 billion of BABs - not to mention other BAB offerings from New Jersey and New York issuers.
The largest deal this week hails from the Sunshine state, where the Citizens Property Insurance Corp. is planning to sell $2 billion of senior secured high-risk account bonds to build liquidity for future claims-paying purposes.
The tax-exempt offering is not subject to the alternative minimum tax and is being senior-managed by Goldman, Sachs & Co., which expects to price the issue on Thursday. The structure of the deal was still being hammered out at press time on Friday.
The bonds were upgraded earlier this month by Moody's Investors Service to A2 from A3, while Standard & Poor's assigned its A-plus rating.
The Florida deal comes on the heels of last week's oversubscribed sales of California GOs and BABs, as well as a $1.37 billion revenue bond issue from the New Jersey Turnpike Authority that included $1.25 billion of BABs.
The California sale was the fourth-largest municipal deal in history, and the largest Build America Bond deal to date as it was increased substantially from an expected $4 billion.
The 2034 maturity, which consisted of $2 billion of BABs, yielded 7.43% in 2034. In addition, the 2039 maturity, which contained $3 billion of BABs, was split into two coupons. The 7.55% coupon yielded a 7.43%, while the 5.60% coupon yielded a 5.526% and has a mandatory put in 2013.
The 7.43%-yielding BABs yielded 308 basis points higher than the 30-year triple-A GO scale published by Municipal Market Data at the time of the pricing last Wednesday.
Meanwhile, the 2034 and 2039 maturities yielded 365 basis points higher than 30-year Treasuries. California's GO debt is rated single-A by all three major rating agencies.
Meanwhile, in the New Jersey Turnpike's BAB revenue deal, the 2040 maturity yielded 7.41% at par, 370 basis points over the 30-year Treasury, and 297 basis points higher than the MMD 30-year triple-A GO scale. The turnpike bonds were rated A3 by Moody's, A-plus by Standard & Poor's, and A by Fitch.
As the BAB bonanza continued last week, New York's Metropolitan Transportation Authority upsized its sale of BABs to $750 million from $200 million last Thursday and included a 2039 maturity yielding 7.336% at par, 350 basis points higher than the 30-year Treasury yield.
Back in the new-issue market this week, conduit health care authorities in two states will issue debt on behalf of Catholic Healthcare West, a San Francisco-based nonprofit health care provider that serves California as well as Arizona and Nevada.
The JPMorgan-led deal is expected to be priced on Thursday and consists of a combined $590.5 million of bonds issued by the California Health Facilities Financing Authority and the Maricopa County, Ariz., Industrial Development Authority of structured to include serial bonds maturing from 2010 to 2035.
The bonds are expected to be rated A2 by Moody's and A-plus by Fitch.
The New Jersey Transportation Trust Fund Authority is planning to issue $350 million of debt in a multi-faceted financing slated for pricing tomorrow, after a retail order period today.
The deal, which is being senior-managed by Merrill, Lynch & Co., is expected to include $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; and $90 million of convertible bonds maturing in 2039.
The bonds are rated A1 by Moody's, AA-minus by Standard & Poor's, and A-plus by Fitch.
Elsewhere in the Garden State, the New Jersey Health Care Facilities Financing Authority will sell $304.9 million of revenue debt on behalf of Virtua Health, a multi-hospital health care system based in Marlton, N.J.
The Morgan Stanley-led deal is expected to price tomorrow. The bonds are rated AA-plus by Standard & Poor's, but the structure was not available at press time.