Shawnee County, Kan., Unified School District 501's $110 million taxable general obligation bonds will reap the rewards of being one of a few large competitive issues being auctioned, making it the target of zealous competition from underwriters, investors say.
"All the competitive deals are coming aggressively because underwriters are fighting for a piece of the pie," a trader in New York said. "There's nothing out there these days, underwriters need to eat something."
Total municipal bond volume for the year totaled $115 billion as of May 31, compared to $153 billion for the same period in 2013, according to data provided by The Bond Buyer and Ipreo. Issuance also fell off this week, dropping to $6.4 billion from $9.3 billion last week. Competitive deals accounted for $26.5 billion of the year-to-date issuance, down from $34 billion to that point last year, a 22% decline.
"We sense a lot of competition among underwriting firms," a trader in Connecticut said. "Whenever there is an underwriting opportunity we as a financial advisory firm get bombarded [by underwriters] saying 'hey look at this'. For most new issues, the majority get done on competitive basis, and we get a number of bid on each competitive bond deal."
The Shawnee deal is rated Aa3 by Moody's Investors Service, and AA by Fitch Ratings.
Jefferies will price $500 million of Metropolitan Transportation Authority revenue bonds on Thursday after holding a retail order period Wednesday. The deal is rated A2 by Moody's, A-plus by S&P and A by Fitch.
