The $900 million Texas Department of Transportation general obligation mobility fund and refunding bonds scheduled to sell on Wednesday will be priced aggressively, traders predict.
Bank of America Merrill Lynch will price the deal, which is the largest negotiated deal expected to come to market this week.
"I think it will get fairly aggressive pricing," a trader in Texas said.
The trader also said the deal will be priced richly because of its high ratings. The deal is rated triple-A by Moody's Investor Services, Standard and Poor's and Fitch Ratings. He does not think investors will be deterred by the bonds' high prices though.
"People will buy [the Texas DOT bonds] because of their quality," he said. "We saw the market firm up a little bit at the end of last week, and it is a name in Texas and has the AAA."
A trader in Chicago also said he thinks the bonds will be expensive, but does not believe this will be an issue because the reinvestment period has started.
"Buyers have cash from June 1 coupon payments and bonds maturing, and many investors received payments on June 15 too," he said.
Citigroup Global Markets will issue $590 million of Oregon tax anticipation notes on Tuesday. The deal is rated MIG 1 by Moody's, SP-1-plus by S&P and F1-plus by Fitch.
Loop Capital Markets will bring $555 million of Chicago Transit Authority sales tax receipts revenue bonds on Wednesday. The deal is rated AA by S&P and AA by Kroll Bond Rating Agency.
In the competitive market, Georgia is expected to auction a four-part GO deal totaling $982.7 million on Tuesday, the largest deal of the week. The deal received a AAA rating from Fitch.
The Port Authority of New York & New Jersey will sell $400 million of consolidated bonds. The deal is rated Aa3 by Moody's and AA-minus by both S&P and Fitch.
Treasuries were mixed Monday morning, with the 10-year benchmark slipping one basis point to 2.59% and the two-year note rising one basis point to 0.46%. The 30-year yields were unchanged at 3.40% from Friday's market close.
