Volume is expected to increase slightly this week thanks to the arrival of several significantly sized financings in the long-term market. They include a large Florida airport deal, a pair of California utility offerings, and a trio of Northeast deals hailing from issuers in New York, Pennsylvania, and the District of Columbia.
According to Ipreo LLC and The Bond Buyer, an estimated $5.26 billion in new volume is expected to be priced this week — slightly more than the revised $4.34 billion that actually came to market last week, according to Thomson Reuters.
The municipal market ended with a slightly firmer tone amid light to moderate trading in the secondary market last week and the pricing of $900 million of taxable BABs by the Los Angeles Community College District on Thursday, which yielded 6.54% with a 6.6% coupon in 2042, or 4.25% after the 35% federal subsidy, and 6.69% with a 6.75% coupon in 2049, or 4.35% after the subsidy.
The bonds were priced to yield 255 and 270 basis points over the comparable Treasury yield. The generic triple-A general obligation scale in 2040 fell two basis points on the week, meanwhile, ending at a 3.97% on Friday after closing at a 3.99% last Monday, according to Municipal Market Data.
The primary market features a trio of separate note deals this week from cash-strapped Illinois totaling $1.3 billion. The three are expected to be priced in the competitive market Tuesday but not factored into the week’s estimated volume.
The notes, which will mature in 2011 and be issued as GO certificates, consist of a $500 million series as well as two others sized at $400 million each — all rated SP-1 by Standard & Poor’s. The long-term market will be headlined by the expected issuance of $523.47 million of tax-exempt aviation revenue bonds by Miami-Dade County in what is believed to be the last major financing for Miami International Airport’s $6.49 billion capital improvement plan.
The deal, which is not subject to the alternative minimum tax, is expected to be priced on Wednesday by JPMorgan after a retail order period Tuesday. It completes the financing of the airport’s north terminal renovation and expansion as well as other airport improvements.
The structure includes serial bonds tentatively maturing from 2012 to 2030, and term bonds in 2030, 2035, and 2041. The bonds are rated A2 by Moody’s Investors Service, A-minus by Standard & Poor’s, and A by Fitch Ratings.
A $455.8 million water revenue deal from the San Francisco Public Utility Commission is the larger of two California utility deals that include taxable Build America Bonds. Slated for pricing in the competitive market Thursday, the deal includes $409.6 million of water revenue bonds, which will be sold as taxable BABs, as well as another $46.2 million that consists of tax-exempt water revenue and refunding bonds.
Rated Aa2 by Moody’s and AA-minus by Standard & Poor’s, the deal will finance capital improvement projects.
Elsewhere in the state, the Sacramento Municipal Utility District is expected to issue $250 million of electric revenue bonds in a JPMorgan-led pricing on Thursday.
Structured as taxable BABs maturing from 2032 to 2036, the all new-money issue is rated A1 by Moody’s, A-plus by Standard & Poor’s, and A by Fitch. The agency revised its outlook on the bonds last week to positive from stable based on the utility’s decreased variable-rate debt, improved liquidity position, and limited new generation needs.
As of Friday, a $250 million sale of electric-system revenue certificates of participation from California’s Imperial Irrigation District being negotiated by Goldman, Sachs & Co. remained on the day-to-day calendar, according to sources at the firm.
Three sizable transportation-related deals are poised to capture investor attention in the Northeast. The largest is a $400 million sale of consolidated bonds from the Port Authority of New York and New Jersey that is planned for pricing in the competitive market Wednesday. The deal, whose serial structure was not yet finalized at press time, is rated Aa2 by Moody’s, AA-minus by Standard & Poor’s, and AA-minus by Fitch.
The Metropolitan Washington Airports Authority is expected to add to the Northeast volume when it sells between $340 million and $387 million of airport system revenue and refunding bonds in a two-pronged, negotiated deal being senior-managed by Barclays Capital.
The deal, which is structured with serial and term bonds maturing between 2011 and 2040, is slated for pricing Tuesday after today’s planned retail order period and is rated Aa3 by Moody’s, AA-minus by Standard & Poor’s, and AA by Fitch.
A $282 million offering of subordinated revenue bonds from the Pennsylvania Turnpike Commission is expected to round out the region’s activity tomorrow when it is priced by JPMorgan. The deal, which includes new-money and refunding debt, is structured as non-AMT bonds maturing from 2020 to 2037. The bonds are rated A3 by Moody’s and A-minus by Standard & Poor’s.
One of the only other sizable offerings this week is a $336 million sale of sewer revenue and refunding bonds from King County, Wash. It’s expected to be priced in the competitive market today and is structured with serial bonds maturing from 2011 to 2050. The county’s debt is rated Aa2 by Moody’s and AA-plus by Standard & Poor’s.