Los Angeles will take the lead on new issuance volume, offering nearly $1.4 billion of tax and revenue anticipation notes expected to be priced on Wednesday.
"I think we're going to do quite well," Miguel Santana, the city administrative officer of Los Angles said in an interview. "A lot of it has to do with L.A.'s economy. The fundamentals are there even though we have a new mayor. The government is staying flat and every year we're getting stronger and stronger."
L.A.'s 2014-2015 budget has grown 5.56% and is anticipated to continue growing through 2018.
The notes mature June 25, 2015.
"We'll be paying attention to L.A., but the risk is so short," a trader based in New York said. "It will be well received though, because people just want somewhere to park their cash."
Ramirez & Co. is the lead underwriter. The deal received a MIG 1 rating from Moody's Investors Service, SP-1-plus from Standard and Poor's and F1-plus from Fitch Ratings. Santana said they recently requested a rating from Kroll Bond Rating Agency.
Santana along with other representatives from L.A.'s finance team have been touring the east coast this past week and are in town Friday promoting the TRANs.
"Most of our investors are east coast investors," Santana said. "We also have some retail investors from all over the country."
The Los Angeles note isn't the only billion dollar deal scheduled for next week.
"Supply is picking up next week, so there could be a little bit of pressure in the market," a New York trader said.
Not far behind Los Angeles, the New York State Dormitory Authority is expected to sell $1.1 billion of revenue bonds in the competitive market next Tuesday and the state of Washington will sell $1 billion of general obligation bonds by competitive bid on Wednesday.
"We'll also be keeping eye on the Dormitory deal since it's recently been upgraded by Moody's from Aa2 to Aa1," a New York trader said. "We'll be looking to it for spread tightening."
Other large deals for next week include $631 million of Texas Public Finance Authority refunding GOs and $500 million of GOs from the commonwealth of Massachusetts.
Munis were mostly steady Friday afternoon for bonds maturing in 17 to 29 years. Yields on the short-end of the curve were also steady, while yields on bonds maturing in six to 16 years rose as much as one basis point.
Treasuries were mixed Friday afternoon, with 30-year yields falling one basis point to 3.46% and the two-year note rising one basis point to 0.47%. The 10-year benchmark was unchanged from Thursday's market close at 2.63%.
