Issuers in South Carolina and California will face little competition as they lead an otherwise light slate of new volume in the competitive and negotiated markets estimated at just $2.62 billion, according to Ipreo LLC and The Bond Buyer.
This week’s slate compares to a revised and equally modest $2.94 billion of volume last week, far below the typical $8 billion, according to Thomson Reuters.
Volume is expected to continue its seasonally light pace this month on the heels of January’s paltry $12.2 billion, according to preliminary data from Thomson. January’s volume was nearly 63% less than that of January 2010, and the slimmest volume of any month since January 2000.
“February is also typically a lighter month, with volume usually around $25 billion to $30 billion,” John Hallacy, municipal research strategist at Bank of America Merrill Lynch, wrote in his weekly commentary.
Given the 30-day visible supply of $7.97 billion, he noted, “there is a very good chance that February will also disappoint market participants.”
“In some respects, the volume this year reminds us of the extremely light volume year of 1987 when issuance was about a third of the volume that was sold before the Tax Reform Act took full effect,” Hallacy wrote.
This week, the muted activity will be led by the competitive market, where a two-pronged South Carolina general obligation refunding totaling $324 million is slated for Wednesday.
The deal consists of $197.2 million of school facilities bonds scheduled to mature from 2012 to 2017, and $126.2 million of capital improvement bonds scheduled to mature from 2012 to 2018.
The bonds have outstanding GO ratings of Aaa from Moody’s Investors Service, AA-plus from Standard & Poor’s, and AAA from Fitch Ratings.
Switching gears to the negotiated market, the San Joaquin County, Calif., Transportation Authority is poised to bring $211.78 million of limited tax sales tax revenue bonds. JPMorgan is expected to price the offering Wednesday after a retail order period Tuesday.
The bonds are rated Aa3 from Moody’s and AA from Standard & Poor’s. They are tentatively structured to mature from 2012 to 2041, the firm said Friday.
In the Midwest, Ohio will sell $170 million of infrastructure improvement GO bonds. Siebert, Brandford Shank & Co. will price the deal Tuesday, following a retail order period Monday. They are rated Aa1 by Moody’s, and AA-plus by both Standard & Poor’s and Fitch.
The bonds are expected to be structured as two series of new-money serial bonds — $120 million maturing from 2013 to 2030 and $50 million maturing from 2013 to 2025.
The Pennsylvania Higher Educational Facilities Authority will come to market with $150 million of Series 2011 A revenue bonds on behalf of the University of Pennsylvania.
The bonds will be priced by Morgan Stanley Wednesday after a retail order period Tuesday. They are expected to be rated Aa2 by Moody’s and AA-plus by Standard & Poor’s. Further details were not available by press time.
Last week, the market was weighed down by an influx of long-end customer bid-wanted lists that put pressure on the 30-year slope of the curve. The 30-year Municipal Market Data triple-A yield curve, for instance, climbed 14 basis points last week, closing at 4.92% Friday.
Underwriters at Goldman, Sachs & Co. priced the final 2035 maturity from a $775 million New York City Transitional Finance Authority tax-exempt offering last Wednesday with a 5.125% coupon and 5.15% yield — which came 39 basis points higher yielding than the MMD triple-A GO scale at the time of the pricing.
The sale of future tax-secured, subordinate-lien bonds was offered to retail investors during a two-day order period last Monday and Tuesday.