A nearly $700 million Maryland general obligation sale will headline the primary market this week — despite facing potential spending constraints — and will be among several other Northeast issuers that will dominate the new-issue calendar following strong activity last Friday.
March volume seems to be kicking off at a brisk pace as an estimated $5.42 billion is expected to be priced this week, according to The Bond Buyer and Ipreo LLC. The brisk volume is in contrast to February’s volume, which was down 22% over the same period in 2012, according to Thomson Reuters. Last month, issuers sold $21.1 billion in 894 deals, compared to $27 billion in 1,051 issues in February 2012.
The municipal market managed to shrug off reports of decreasing February volume as municipal scales finished flat across the curve Thursday after posting gains throughout much of the week.
On the heels of mostly steady gains, yields on the Municipal Market Data triple-A GO scale ended steady. The 10-year yield and the 30-year yield finished flat at 1.81% and 2.91%, respectively, for the second session. The two-year closed at 0.31% for the eighth straight session.
Judging by the appetite for last week’s largest deals, issuers in the market this week should also find eager buyers, depending on pricing, according to underwriters.
Maryland will sell its $692.6 million triple-A-rated GO sale on Wednesday consisting of $500 million of Series A new-money bonds and $192 million of Series B refunding bonds.
While all three rating agencies assign triple-A ratings to the state’s GO pledge, Moody’s Investors Service has placed the state on negative outlook because of its particularly close economic ties to the fiscally constrained federal government. Maryland issue some$1.5 billion in 2012, and close to $1.3 billion in 2011. New York State, meanwhile, is planning to sell $326 million of GO debt structured as serials bonds on Thursday.
In other large competitive deals outside of the Northeast, the Lower Colorado River Authority is planning to issue $307 million of revenue debt on Tuesday. The bonds are rated A2 by Moody’s and A by Standard & Poor’s.
Switching gears to the negotiated market, a $400.54 million financing of home-ownership mortgage revenue bonds from the Virginia Housing Development Authority is slated for pricing by Raymond James & Associates on Wednesday.
The taxable deal will consist of a term bond due in 2042 and is rated Aa1 by Moody’s and AA-plus by Standard & Poor’s.
Connecticut will add to the activity with its $400 million GO sale expected to be priced by Citi on Wednesday following a retail order period on Tuesday. The two-pronged structure will consist of $200 million of floating-rate notes maturing from 2014 to 2023 and $300 million of GO bonds maturing from 2024 to 2033.
Meanwhile, the Maryland Health & Higher Educational Facilities Authority is gearing up to issue a total of $357.70 million of medical system revenue bonds on behalf of the University of Maryland.
The deal, which will be priced by JPMorgan on Thursday, is comprised of $241.8 million of revenue bonds in Series 2013A and $114.95 million of taxable revenue bonds in Series 2013B. The structure was still being finalized at press time.
Elsewhere in the higher education sector, the Regents of the University of California will return to the market for the second time in as many weeks — this time to sell $286.51 million of taxable fixed-rate notes.
The negotiated sale, being priced by Bank of America Merrill Lynch on Tuesday, is expected to be rated Aa1 by Moody’s, AA by Standard & Poor’s and AA-plus by Fitch Ratings.
Last week, the university sold $794.1 million of general revenue bonds that were rated Aa1 by Moody’s, AA by Standard & Poor’s and AA-plus by Fitch. The bonds are subject to an optional call in 2023 at par.
The deal’s final 2039 maturity carried a 5% coupon and was repriced to yield 3.23%, which was 38 basis points more attractive than the comparable generic, triple-A GO scale in 2039 at the time of the pricing, according to Municipal Market Data.
A $270.1 million sale on Thursday of project revenue bonds from the University of Massachusetts Building Authority will round out the Northeast activity. The two-pronged deal consists of $198.38 million of tax-exempt senior bonds maturing serially from 2014 to 2023, and a final term bond in 2043, as well as $71.74 million of senior taxable bonds expected to have the same structure.
Two other large deals will also enter the negotiated market, the larger of which will hail from the Southeast where a $219.80 million sale of water and sewer revenue refunding bonds from Fulton County, Ga., is on tap.
Slated for pricing by JPMorgan on Tuesday, the bonds are expected to be rated Aa3 by Moody’s and equivalent AA-minus ratings by Standard & Poor’s and Fitch and are structured to mature serially from 2025 to 2035.
Meanwhile, Nevada will headline the activity in the Far West market on Thursday when it sells $200.2 million of limited-tax capital improvement bonds in a five-pronged deal being priced by Morgan Stanley.
The largest of the series is a $98.81 million component of capital improvement and cultural affairs refunding bonds, $64.97 million of taxable capital improvement and cultural affairs refunding bonds, $12.11 million of natural resources refunding bonds, $3.59 million of open space, parks and cultural resources bonds, and well as $20.7 million of open space, parks, and natural resources refunding debt.