Municipal issuers are gearing up to sell more than $9 billion of new bonds in the coming week, led by a $2.9 billion Texas transportation offering, as buying over the previous two sessions suggests demand may be gaining momentum.
On Friday, the generic, triple-A general obligation scale in 2043 ended down one basis points at 4%, after falling five basis points the prior day, according to Municipal Market Data. Deals found demand, including Thursday’s $217 million competitive, triple-A-rated Utah GO sale, most of which ended up firmer than the MMD scale. There was also demand for a $228.5 million double-A-rated University of Connecticut GO sale that priced for retail on Friday and whose final 2033 maturity came with a 4.33% yield.
This week, Ipreo LLC and The Bond Buyer estimated that $9.65 billion of new volume will be priced, up from a revised $5.38 billion that actually came last week, according to Thomson Reuters.
The $3 billion Texas transportation deal from the Grand Parkway Transportation Corporation should be well-received, according to Thomas Nolan, senior managing director of municipal trading and underwriter at Estrada Hinojosa & Co. in Dallas.
“It’s got a number of different tranches for different types of buyers, so they will be able to place the bonds,” he said on Friday, while underwriters at Goldman, Sachs & Co. finalized the details of the Wednesday pricing. “The various tranches are different than the market has seen, but there’ll certainly be buyers for the bonds.”
The toll revenue bond offering will come with five series, including first-tier, tax-exempt bonds rated BBB by Standard & Poor’s and BBB-plus by Fitch Ratings; and subordinated tax-exempt and taxable bonds, as well as subordinated tax-exempt and taxable tender bonds -- both of which are rated AA by Standard & Poor’s and AA-minus by Fitch.
Nolan said this week’s other deals should generate demand, given that there is still unspent cash from July 1 rollovers, recent new deals did well, and Federal Reserve Board Chairman Ben Bernanke’s testimony on Wednesday helped strengthen the market.
“The Texas market has seen a lot of issuance, but the market seems to be digesting it well,” Nolan said. “Bernanke helped right the ship and garner interest in the market and hopefully that will carry into next week,” Nolan said on Friday.
Citi will price a $450 million revenue sale on Thursday from the San Francisco Airport Commission for the San Francisco International Airport -- with $368 million of the bonds subject to the alternative minimum tax, $101 million of tax-exempt bonds, and $12 million of taxable paper.
A $672 New York State Dormitory Authority revenue sale will dominate a skimpy competitive market on Tuesday, followed by a $387 million GO and refunding from the San Diego Community College District priced on Wednesday by RBC Capital Markets. The double-A-rated dormitory issue will include $627.7 million of tax-exempt state personal income tax bonds and $44.63 million of taxable PIT bonds. The San Diego college deal is rated Aa1 by Moody’s and AA-plus by Standard & Poor’s.
The Miami-Dade County School District will come to market Tuesday with a competitive $250 million tax anticipation note sale..
In other activity, a $487 million water and sewer revenue and refunding from Miami-Dade County is expected to be priced by Morgan Stanley & Co. on Thursday. The bonds have underlying ratings of Aa3 from Moody’s Investors Service, and A-plus from Standard & Poor’s and Fitch Ratings.
