A pair of issuers from Los Angeles will have starring roles in this week's primary market, which is expected to see an estimated $7.67 billion of new-issue volume, according to Thomson Reuters, compared with a revised $6.27 billion last week.
The largest of the two is a $905.1 million financing for Los Angeles International Airport, one of the country's busiest, while the other deal is a $500 million school note deal.
Los Angeles World Airports will bring a four-pronged deal - a portion of which is subject to the alternative minimum tax - on Wednesday, after a retail order period tomorrow led by senior book-runner Goldman, Sachs & Co.
The largest portion of the LAX deal consists of $613.3 million of Series 2008A senior revenue bonds subject to the AMT, while Series 2008B is a refunding of senior revenue bonds that totals $8 million and is also subject to the AMT. Series 2008C consists of $250.1 million of non-AMT subordinate revenue bonds, followed by Series 2008 D, which totals $33.7 million of non-AMT subordinate revenue refunding bonds.
The structure was still being discussed at press time on Friday. The airport is in the midst of its biggest renovation effort since before Los Angeles hosted the 1984 Summer Olympics. It plans to spend $4.1 billion to rebuild its terminals and improve its runways over the next six years, with $1.7 billion of the project costs financed by debt.
The LAX senior bonds are rated Aa3 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings, while the subordinate bonds are rated A1 by Moody's and AA-minus by Standard & Poor's and Fitch.
Ed Droesch, managing director of underwriting at Goldman, said the deal should get some keen attention from both retail and institutional investors because of its timing. "It's a new name in the market and it hasn't been in the market in a while," he said. "There has been a pretty consistent flow of California paper, but not an overwhelming amount."
The Los Angeles Unified School District will sell $500 million of tax and revenue anticipation notes on Wednesday in a negotiated deal being priced by Banc of America Securities LLC. The one-year notes are rated SP-1-plus.
Northeast offerings from well-known issuers should also attract investors in New York, Massachusetts, New Jersey, and Pennsylvania looking for new supply.
The largest deal in the region will arrive when the Port Authority of New York and New Jersey sells $500 million of consolidated bonds in the competitive market on Wednesday. The structure includes serial bonds maturing from 2018 to 2038, and the bonds are rated Aa3 by Moody's and AA-minus by Standard & Poor's and Fitch.
A $335 million sale from the Massachusetts Health and Educational Facilities Authority is expected to be priced by Lehman Brothers on Thursday on behalf of the Massachusetts Institute of Technology. The bonds have natural triple-A ratings from both Moody's and Standard & Poor's. A source at Lehman said the structure of the deal was still being discussed on Friday.
In the Garden State, the New Jersey Health Care Facilities Authority will sell $249.6 million of revenue bonds tomorrow in a negotiated deal led by Morgan Stanley. The structure of the deal was not available at press time.
Elsewhere in the region, a $234.3 million revenue offering from the Pennsylvania Turnpike Commission is expected to be priced by Merrill, Lynch & Co. tomorrow.
The two-pronged deal consists of Series 2008B-1 tax-exempt bonds structured to mature serially from 2025 to 2028 with term bonds anticipated in 2030, 2033, and 2036, and Series 2008B-2 taxable bonds that mature serially from 2018 to 2020 with a term bond expected in 2025.
The bonds have underlying ratings of A2 from Moody's and A-minus from Standard & Poor's, but the entire deal will be insured by Assured Guaranty Corp.
The Florida Hurricane Catastrophe Fund Finance Corp., meanwhile, will issue a sizable revenue offering when Citi prices its $625 million sale tomorrow.
Structured with just two maturities in 2013 and 2014, the bonds are rated Aa3 by Moody's, AA-plus by Standard & Poor's, and A-minus by Fitch.
Back in the transportation sector, a $322.7 million sale of senior-lien toll road revenue and refunding bonds are being issued by Harris County, Tex.
The deal, which is being priced by Goldman today, is structured with serial bonds maturing from 2012 to 2028 and term bonds in 2033, 2038, and 2047. The bonds are rated Aa3 by Moody's and AA-minus by Standard & Poor's.
Two other sizable deals planned for this week include environmental and hospital financings in California and Michigan.
The Imperial Irrigation District in California is planning to issue $240 million of revenue bonds on Thursday when Citi prices the deal with serial bonds maturing from 2008 to 2038 and insurance from Financial Security Assurance.
The bonds have underlying ratings of A1 from Moody's, A-plus from Standard & Poor's, and AA-minus from Fitch.
The Michigan State Hospital Authority will sell $203 million of revenue and refunding bonds on behalf of McLaren Health Care Corp. in a deal expected to be priced by Citi tomorrow. McLaren has 100 facilities located in 12 counties consisting of a network of hospitals, ambulatory surgery centers, imaging centers, freestanding dialysis centers, an employed primary care physician network, assisted living facilities, commercial and Medicaid HMOs, and home health care.
Rated A1 by Moody's, the bonds are weighted on the long end, structured to consist of three term bonds maturing in 2028, 2033, and 2038.
