Municipal volume is estimated to drop to $5 billion for the week of Aug. 10, with only 11 negotiated deals and no competitive sales larger than $100 million on the calendar.
Muni analysts predict that lighter volume may become the norm, as a drop in refundings is behind this week's dip. Volume came in at $6.9 billion in the past week according to Thomson Reuters.
"Since the rates on the 10-year triple-A scale have been over 2%, we have seen the refundings really drop," said Chris Mauro, director of municipal bond research at RBC Capital Markets.
"Now the refunding volume has been cut in half and the new money has ticked up slightly, which is encouraging, but it hasn't ticked up to the point where you can say it is roaring back but it has firmed," he said. "I suspect that these trends will continue."
The biggest deal of the week is a $1 billion offering from the Kansas Development Finance Authority. The deal, to be by priced by Bank of America Merrill Lynch on Wednesday, consists of Series 2015H taxable revenue bonds. The issue is rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's.
The bonds earned the ratings despite recent troubles in the state's finances. Moody's assigned a stable outlook, while S&P called the outlook negative. The pension bond rating is one notch lower than the state's Aa2 issuer rating to reflect appropriation risk, analysts said. The 2015H bonds are secured by payments from the Kansas Legislature, which must be approved annually.
Co-book runners on the negotiated sale are Bank of America Merrill Lynch, led by director Eric Cowan, and Wells Fargo Securities, led by vice president John Moore. Co-managers are Piper Jaffray, Citi, Stifel Nicolaus, and Hutchinson, Shockey, Erley & Co.
The KDFAis ready to go to market with the $1 billion of pension obligation bond sale that drew a heated debate in the longest legislative session in the state's history.
The taxable bonds are expected to price Aug. 12 with closing Aug. 20, said Jim MacMurray, senior vice president for finance at KDFA.
"This will be the largest deal KDFA has ever done," MacMurray said.
Wells Fargo Securities is scheduled to price Charlotte, N.C.'s $475 million of water and sewer revenue bonds on Thursday. The issue is rated triple-A by Moody's, S&P and Fitch Ratings.
Goldman, Sachs will price the $381.705 million of hospital refunding revenue bonds, Series 2015 for the Children's Hospital Obligated Group Issue in Washington, D.C. on Thursday.
Goldman is also scheduled to price the Los Angeles County Public Works Authority, Calif.'s $218.155 million of lease revenue refunding bonds on Wednesday. The issue, which consists of Series B tax-exempts and Series C taxables, is rated A1 by Moody's, AA by S&P and A-plus by Fitch.
Wells Fargo is also scheduled to price MEAG's $183.76 million of Georgia Power Project J revenue bonds on Tuesday. The bonds are rated A2 by Moody's and A-plus by S&P and Fitch.
Morgan Stanley will price the state of Michigan's $129.31 million of Series 2015A tax-exempt general obligation environmental program refunding bonds on Wednesday. The issue is rated Aa1 by Moody's and AA-minus by S&P and Fitch.
Wells is also expected to price the Santa Clara University, Calif.'s $110 million of bonds on Thursday. The issue is rated Aa3 by Moody's.
— Rich Williamson contributed to this report.
