Traders are looking at next week's largest deal $450 million Illinois State Toll Highway Authority Toll senior revenue bonds.
"The Illinois State Highway Toll deal is coming to market next week," a trader in New York said. "There should be a lot of interest. Illinois state hasn't been to market in a while."
The bonds are scheduled to be brought to market by Citigroup Global Markets on Wednesday. They are rated Aa3 by Moody's Investors Service, and AA-minus by Standard & Poor's and Fitch Ratings.
"There's a limited calendar next week," a second trader in New York said. "The Illinois deal should be interesting."
The second trader in New York also noted the New Jersey Higher Education Student Assistance Authority plans to sell $195 million of senior student loan revenue bonds next week, with a retail order period scheduled Wednesday and institutional sale on Thursday. Bank of America Merrill Lynch is the managing underwriter on the deal, and the bonds are rated Aa2 by Moody's and AA by Standard & Poor's.
While this trader is looking at these deals he said "nothing stands out."
Part of the reason traders said they are fairly apathetic about deals scheduled for next week is because low supply has been driving up prices on recent deals. Last week's volume was originally projected to be $4.5 billion, but $6.2 billion sold, according to data provided by Ipreo and The Bond Buyer.
Projected volume for next week is low at $3.92 billion.
"Next week's calendar isn't big," the first trader said. "Deals will be priced and prices will be improved during the course of underwriting."
The second trader described next week's expected calendar as "limited."
"I agree, everything is being priced rich," a trader in California said. "There is no supply so you have no secondary stuff coming out to basically buy those bonds. There is no selling pressure at that point."
Bond sales through April 30 totaled $86.76 billion, compared to $122.72 billion for the same period in 2013, according to data provided by Ipreo and The Bond Buyer.
"Low supply has been the theme of the year," a trader in Chicago said.
Going forward, a second trader in California said he plans to keep an eye on Federal Reserve Chairwoman Janet Yellen's Wednesday speech. "We have Janet Yellen's speech ahead," he said. "There are still some potential road bumps ahead, it will be interesting to see how bond market reacts to that."
