The $1 billion-plus Washington general obligation deal scheduled for auction Wednesday will reveal the market's true demand for paper, investors say.
The deal is expected to come in four parts totaling $402 million, $392.6 million, $292.8 million, and $87 million respectively. The $87 million portion is taxable and the rest are tax-exempt.
"I'm interested in seeing how Washington competes," a trader in Florida said. "It should garner some interest but will be a good test for the market."
The deal received a Aa1 rating from Moody's Investors Service, and AA-plus from Standard & Poor's and Fitch Ratings.
The week is packed with large deals from well-known issuers like the $1.4 billion Los Angeles tax and revenue anticipation notes scheduled to price on Thursday, and the $1.16 million New York State Dormitory Authority personal income tax revenue bonds that were auctioned on Tuesday.
This year the supply-demand dynamics have been tilting in favor of issuers. Supply has remained low totaling $115 billion as of May 31, compared to $153 billion for the same period in 2013, according to data from The Bond Buyer and Ipreo.
Demand for municipal bonds has remained strong, with municipal bond funds reporting inflows for seven straight weeks as of June 18, according to Lipper FMI. Last week inflows totaled $147.7 million.
While this is still positive for the municipal bond market, inflows had dropped off from the week ending June 11, when inflows totaled $306.9 million. In May inflows ranged between$616.5 million and $943 million.
"I think the billion from the state of Washington will be a good proxy for the demand-supply equation in the marketplace," a trader in Chicago said. "It's a state GO and because it's rated stable by all three credit rating agencies, it will be a good proxy for the market."
Jefferies will bring a two-fold deal totaling $500 million of general obligation bonds for the commonwealth of Massachusetts. The deal consists of SIFMA floating rate notes with a step-up date on June 1, 2016, for one and June 1, 2017, for the other, at an 8% rate. The deal is rated Aa1 by Moody's, and AA-plus by both S&P and Fitch.
J.P. Morgan will sell $250 million of Jacksonville Electric Authority water and sewer revenue bonds. The deal is rated Aa2 by Moody's and AA by both S&P and Fitch.
JP Morgan will bring $250 million of a two-fold deal totaling $508.9 million of Texas Public Finance Authority refunding general obligation bonds. The $258.9 million part of the deal was priced on Tuesday. The entire deal is triple-A rated by Moody's Investors Service, Standard & Poor's and Fitch Ratings.
Citigroup Global Markets will bring $185.7 million of Michigan Finance Authority revenue bonds to the market on Tuesday. The bonds mature serially from 2015 to 2034, with term bonds in 2039 and 2044. The deal is not yet rated.
Citigroup Global Markets will price for institutions $178.1 million of Oregon Department of Transportation Highway User tax revenue bonds. A retail order period was held Tuesday. The deal is rated Aa1 by Moody's, AA by S&P and AA-plus by Fitch.
Stifel, Nicolaus and Co., will bring a two-fold deal totaling $177.5 million of Albuquerque Municipal School District No. 12 Bernalillo and Sandoval Counties, N.M., GOs and refunding bonds. The deal is not yet rated.
Raymond James & Associates will issue $163.3 million of Arlington Independent School District, Texas, unlimited tax bonds. The bonds mature serially from 2015 to 2039 and are rated triple-A by Moody's and S&P.
Bank of America will bring $150.3 million of North Texas Municipal Water District revenue refunding and improvement bonds. The deal is rated Aa2 by Moody's and AAA by S&P.
Morgan Stanley will issue $117.7 million of Dallas and Fort Worth Texas International Airport joint revenue improvement bonds. The deal is rated A-plus by S&P, A by Fitch and A-plus/A by Kroll Bond Rating Agency.
The New York City Municipal Water Finance Authority will sell $200 million of water and sewer system second general resolution revenue bonds.
