Investors hungry for more taxable Build America Bonds will have another crack at a relatively sizable offering this week when the Illinois State Toll Highway Authority issues up to $500 million of senior-priority revenue bonds amid an estimated slate of $5.6 billion of total new-issue volume, according to Ipreo LLC and The Bond Buyer.
The lineup compares to a revised $5.4 billion of total volume that the market welcomed last week, according to Thomson Reuters.
This week's Illinois deal is tentatively structured to include $400 million of Series A bonds consisting of taxable BABs with a 35% direct-pay issuer subsidy, and $100 million of Series B tax-exempt bonds.
An authority spokesperson said the final decision on the amount of the BABs would be determined closer to the pricing date by co-senior managers Goldman, Sachs & Co. and Morgan Stanley.
Both series will tentatively include a 2034 final maturity, but no other details about the structure were available on Friday, according to Goldman.
The debt is secured by a senior line on the net revenue of the toll road system. Proceeds will be used to fund the authority's nearly completed, five-year-old $6.3 billion capital program
The senior-lien bonds are rated Aa3 by Moody's Investors Service, and AA-minus by Standard & Poor's and Fitch Ratings.
In what will be a much smaller deal consisting of BABs, Van Buren Public Schools in the Michigan counties of Wayne and Washtenaw is planning to sell $79 million of unlimited-tax general obligation school building and site bonds this week. All of the bonds will be BABs.
The deal, which is being negotiated by senior manager Raymond James & Associates and priced tomorrow, is structured to mature serially from 2010 to 2025, with term bonds expected in 2029 and 2039, according to the preliminary official statement.
Qualified for the Michigan State School Bond Guaranty program, the bonds are expected to be rated Aa3 by Moody's, and AA-minus by Standard & Poor's.
Back in the traditional tax-exempt market, one of the other largest deals of the week will be a $531.5 million sale of water system revenue bonds by the Phoenix Civic Improvement Corp.
Scheduled to be priced by senior manager Goldman on Wednesday, the issue is expected to consist of $442.6 million of Series 2009A junior-lien bonds and $88.8 million of Series 2009B junior-lien revenue refunding bonds, both of which mature from 2010 to 2039.
The bonds are expected to carry ratings of Aa3 from Moody's and AAA from Standard & Poor's.
In Texas, the Harris County Cultural Educational Facilities Financing Corp. is gearing up to issue a two-pronged sale of revenue refunding bonds totaling $150 million and being priced by JPMorgan tomorrow.
Rated AA by Standard & Poor's, the bonds from both series will refund outstanding debt on behalf of Houston-based Methodist Hospital System.
The larger series of the deal consists of $100 million of Series 2009A bonds that are structured as serials from 2012 to 2022 and will refund 2006C variable-rate demand revenue bonds issued by the system.
The structure of the $50 million Series 2009B bonds was still being adjusted at press time, though a source at JPMorgan said there were tentative plans to offer mandatory puts in 2012 and 2013, and that series will refund a portion of the system's Series 2008C debt.
Later this week, meanwhile, a three-pronged sale of GO debt from the Ohio Public Facilities Commission totaling $186.4 million will be tentatively priced for retail investors on Friday by Merrill, Lynch & Co., followed by an official pricing on May 18.
The deal consists of two series of GO refunding bonds - sized at $63.3 million and $49.9 million, respectively - as well as a series of GO higher education debt totaling $73.2 million. The bonds are rated Aa1 by Moody's, and AA-plus by Fitch and Standard & Poor's. The structure was still being hammered out at press time.
Switching gears to the competitive market, Santa Clara County, Calif., is planning to sell $350 million of GO bonds on Wednesday with a structure that matures from 2010 to 2039. The bonds are rated Aa2 by Moody's.
One of the only other sizable deals this week is a $142 million water and wastewater revenue issue from Philadelphia, which is expected to be priced by Banc of America Securities LLC on Wednesday, following a retail order period tomorrow. The credit it rated A3 by Moody's, A by Standard & Poor's, and A-minus by Fitch.
Unlike this week's slate of deals, some of the last week's biggest issues came out of California, including a $442 million sale of senior sewer revenue bonds from the San Diego Public Facilities Financing Authority on Wednesday, whose 2039 final maturity was priced with a 5.43% yield by Banc of America.
Last week also saw the issuance of a sizable BAB offering when the Sacramento Municipal Utility District sold $200 million of taxable electric revenue debt, which had a 2036 maturity priced to yield 6.322%, a 225 basis point spread to Treasuries.
Meanwhile, a $464.2 million sale of natural triple-A Georgia GOs became the largest deal of the week when Merrill decided to upsize the offering from its original $314.5 million to include a $149 million refunding portion. The 2029 final maturity was priced Wednesday with a 4.25% yield, only five basis points higher than the generic triple-A GO scale in 2029 published by Municipal Market Data at the time of the pricing.
On Friday, the generic triple-A GO scale in 2039 fell one basis point from the prior day and ended at a 4.47% at the close of trading, according to MMD.