Primary market volume for the week appears to be less than some in the industry expected following last week's paltry pickings. But this should be positive for pricing and involve less need to unload paper.

The biggest deals are expected to arrive from the competitive side, with large bond auctions from Illinois and an issuer in Colorado on Wednesday leading the way.

"There's a healthy demand for bonds, said Frederick Yosca, managing director and manager of underwriting and trading for BNY Mellon Capital Management. "There's some pent-up cash from the Jan. 1 reinvestment. We're seeing pretty good flows electronically on the websites in the brokers' markets and from the high-net-worth component here."

Industry estimates hold that municipal bonds expected to be sold this week total $3.97 billion, versus a revised $384.9 million last week.

This breaks down to roughly $2.15 billion of negotiated deals slated for sale, compared with a revised $204.3 million last week.

In addition, $1.83 billion in competitive offerings are scheduled for auction, compared with a revised $180.5 million last week.

"From a technical standpoint, a $4 billion calendar for a week that's following no paper really being issued for two to three weeks, it's a positive," Yosca said. "Heavy supply drives down price; light supply should drive prices the other way."

Illinois will lead the charge in the competitive market, selling $800 million in two deals this week.

The state is expected to auction $525 million of Series A general obligation bonds, on Wednesday. The bonds are rated A by Fitch Ratings.

Illinois is also scheduled to auction $275 million of Series B taxable GO bonds on Wednesday. Moody's Investors Service downgraded the state to A2 from A1 on Friday.

The Metro Wastewater Reclamation District in Colorado is expected to auction $380 million of Series 2012A sewer improvement bonds.

The bonds, which should come to market Wednesday, are rated Aa1 by Moody's and AAA by Standard & Poor's.

The state of Colorado is expected on Tuesday to auction $230 million of Series 2012A education loan program tax and revenue anticipation notes. The notes are rated MIG-1 by Moody's and SP-1-plus by Standard & Poor's.

Finally, Allegheny County, Pa., is expected to auction $175 million of Series 2012 tax and revenue anticipation notes. The notes, which should arrive Tuesday, are rated SP-1-plus by Standard & Poor's.

In the negotiated space, Morgan Stanley expects to price $240 million of Orange County, Calif., taxable pension obligation bonds 2012 Series A.

The bonds, which are expected to arrive on Tuesday, are rated Aa2 by Moody's and A-plus by Standard & Poor's.

They are expected to carry a serial structure.

Bank of America Merrill Lynch on Wednesday is expected to price $181 million of North Carolina grant anticipation revenue vehicle bonds. The bonds are rated Aa2 by Moody's, AA by Standard & Poor's, and AA-minus by Fitch.

While the $4 billion expected to come to market "should not be a major hurdle, it certainly represents a significant increase from the holiday period as issuers begin to jump at the attractive financing rates and market stability," wrote Municipal Market Data analysts Domenic Vonella and Randy Smolik in a research post.

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