The municipal market can expect to see $1.2 billion in new issuance this week, down dramatically from last week's revised $4.42 billion as the market takes a rest before Labor Day.

Negotiated deals will take the biggest hit, with $788.6 million expected to come to market, versus a revised $3.48 billion last week. On the competitive side, $407.6 million is projected, down more than half from last week's revised $935.9 million.

The biggest deal of the week, at less than $200 million, comes in the competitive market. The New York Local Government Assistance Corp. will issue $191.2 million of refunding bonds on Tuesday.

The next-largest deals of the week come in the negotiated market. Tampa, Fla., is issuing $128.9 million of water and sewer systems improvement and refunding revenue bonds, with a retail order period on Tuesday followed by institutional pricing Wednesday.

To be priced by Wells Fargo, the bonds are rated double-A plus by Moody's Investors Service, Fitch Ratings and Standard & Poor's. Roughly half the bonds will be refunding and the remainder will refund outstanding short-term notes and support new project costs.

The San Diego County Water Authority will price $110 million of revenue bonds for retail on Tuesday and institutional investors Wednesday. The bonds are underwritten by Bank of America Merrill Lynch and are rated Aa2 by Moody's and AA-plus by Fitch and Standard & Poor's.

Also coming on Wednesday are $93.7 million of hospital revenue refunding bonds issued by New Hanover County, N.C. The bonds, which will be used for the New Hanover Regional Medical Center project, are rated A1 by Moody's and A-plus by Fitch, and have serial maturities from 2012 to 2018 and term bonds maturing in 2028. RBC Capital Markets is the book runner on the deal.

The Indiana Finance Authority will come to market Tuesday with $67.5 million of facilities revenue refunding bonds. The bonds are rated Aa1 by Moody's and AA-plus by Fitch and Standard & Poor's.

Over $21 million of New Castle Correctional Facility bonds have maturities in 2013, 2020, 2021, and 2022.

Almost $20 million of Indiana State Museum facility bonds have serial maturities ranging from 2012 to 2023; $20 million of Evansville State Hospital facility bonds have serial maturities ranging from 2012 to 2024; $1.6 million of Logansport State Hospital facility bonds have serial maturities from 2012 to 2016; and about $5.4 million of Southeast Regional Treatment Center facility bonds have serial maturities ranging from 2012 to 2017.

Lead underwriter City Securities Corp. said it was keeping an eye on hurricane Irene to see how it affects buyers in the Northeast. "We fully anticipate to price the transaction on Tuesday," said Kendra York, public finance director of Indiana. "If buyers on the East Coast can't make it to work, we'll make a game time decision on whether to bring it Tuesday or postpone a day to ensure the best possible pricing for the Indiana Finance Authority."

Another underwriter at City Securities said he expects the deal to go well. "We're expecting some good retail interest on this," the underwriter said. "We have several buyers and think the money managers will be interested. We've also got a nice block size for the institutional buyers, so we expect the whole gamut to participate."

Low issuance this week comes off of mixed reception in the muni market last week. Alan Schankel, managing director at Janney Capital Markets, wrote in a note last week that Rhode Island had to raise yields for institutional buyers and the Ohio State Facilities raised yields on its refunding issue.

"Buyer aversion to yields that are near historical lows has facilitated drift in the Municipal Market Data curve," wrote MMD analyst Randy Smolik.

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