The two biggest deals scheduled for next week are refundings, but market participants do not believe refundings will pick up this year.
The Missouri Highways and Transportation Commission is expected to issue the largest deal of the week on Tuesday a two-part issuance that totals $894.5 million of refunding state road bonds. The state of Connecticut is scheduled to bring $650 million general obligation refunding bonds to market in the second biggest deal of the week.
"One of the things that argues against a significant increase in refundings is we've been sitting in a low interest rate environment for quite some time, but it just does not seem to be that there is enough out there to refund in the context of the interest rate environment we're in," Jim Colby, chief municipal strategist at Van Eck Global, said in an interview.
The first part of the Missouri Highways and Transportation Commission deal consists of $582 million first lien bonds and $312.5 million second lien bonds.
Bank of America Merrill Lynch is scheduled to price the deal on Tuesday, after a retail order period on Monday. The deal is not yet rated.
The Connecticut refunding deal will be brought to market by Morgan Stanley and is rated Aa3 by Moody's Investors Service, and AA by Standard & Poor's and AA by Fitch Ratings.
Barclays Capital predicted in a report released on Friday that refunding levels will range between $10 billion to just above $30 billion every month for the rest of 2014, and that they will consistently remain below 2013's levels.
The two largest competitive issuances are scheduled to hit the market on Wednesday. There is a $200 million Fulton County, Ga., transportation deal that is not yet rated, and a $200 million Massachusetts GO sale that also has not received ratings.
A trader in Florida said that last year his portfolio was underweight in GOs, but this year he finds GOs attractive and is adding to his GO holdings.
Municipal yields rose on the long-end of the curve on Friday morning after falling for three days straight. Yields for bond for bonds maturing in 28 to 30 years rose as much as one basis point, according to Municipal Market Advisors triple-A scale. All other maturities held steady.
Treasury yields on the long-end fell on Friday with the 30-year dropping one basis point to 3.3%, the 10-year held steady at 2.5%, and the two-year remained stable at 0.37%.
