A pair of deals from issuers in Massachusetts and California will headline this week's primary market, where an estimated $4.32 billion is expected to offer the largest - and most notable - increase in new-issue volume since the recent economic turmoil that put the municipal market in a deep freeze over the last six to eight weeks.

This week will see an estimated $3.37 billion in negotiated sales, which is a jump from last week's revised $2.48 billion, according to Thomson Reuters. Market participants said the new issues priced this week should get some keen attention from investors as they are weighted on the long end of the yield curve where maximum yields are still above 5%, and that is where investors flocked on Friday following a rally in the Treasury market.

The intermediate to long end of the municipal curve was stronger on Friday as a result of the increased demand, which caused yields to firm as little as two or as much as six basis points; however, the long end is still relatively attractive. The generic, triple-A general obligation bonds due in 2038 ended at 5.24% at the close of trading on Friday after ending at a 5.22% on Thursday, according to Municipal Market Data.

Last Thursday, demand for high yields chased the long end of the New Jersey Transportation Trust Fund Authority's $1.12 billion of debt.

The deal's size was increased from $750 million due to increased demand for the current interest bonds, according to state Treasury spokesman Tom Vincz.

The transaction included $872.7 million of current interest debt and $249.9 million of capital appreciation bonds. Interest rates on the current interest portion ranged from 5.25% in 2023 to 6% in 2038. The CABs mature annually from 2023 through 2038.

This week, the largest negotiated deal will be $553 million of Massachusetts general obligation refunding bonds being priced tomorrow by Citi with a structure that includes serial bonds maturing from 2009 to 2023 and term bonds in 2028 and 2032. The bonds have ratings of Aa2 from Moody's Investors Service and AA from Standard & Poor's and Fitch Ratings.

That deal will be followed by a $523 million California Department of Water Resources sale of power supply revenue bonds - a remarketing of a 2005 issue and a conversion of auction-rate securities to fixed-rate debt.

JPMorgan will price the deal on Thursday, following a retail order period on Wednesday and will offer four series of bonds and four bullet maturities in 2016, 2018, 2021, and 2022. One of those maturities will be divided into two parts, but the details regarding that part of the structure and which maturities will be assigned to which series was not available by press time.

The deal include Series 2005F-3, which is sized at $150 million, Series 2005F-5, which is $200 million, Series 2005G-4, which totals $98 million, and Series 2005G-11, which is $75 million. The bonds are rated Aa3 by Moody's and A-plus by Standard & Poor's and Fitch.

Back in the Northeast, a $300 million sale of special tax obligation bonds from Connecticut is planned for pricing on tomorrow by Citi. The deal, whose proceeds will be used for transportation infrastructure purposes, will be structured to include serial bonds maturing from 2009 to 2028.

Issuers in Florida, Georgia, and Virginia, meanwhile, will jump-start supply in the Southeast region.

Miami-Dade County is on tap to sell $301 million of water and sewer refunding revenue bonds tomorrow when RBC Capital Markets prices them with a structure of serial bonds maturing from 2009 to 2025.

The bonds have ratings of A1 from Moody's and A-plus from Standard & Poor's and Fitch.

A $297 million sale of subordinated revenue debt from the Municipal Electric Authority of Georgia is expected to be priced by JPMorgan on Wednesday, following a retail order period tomorrow. The deal is comprised of $285 million of Series 2008D bonds structured to mature serially from 2011 to 2020 with term bonds in 2023 and 2026, as well as $11.4 million of Series 2008C bonds is structured to mature with two serial maturities in 2020 and 2024. The bonds are rated A2 by Moody's, A by Standard & Poor's, and A-plus by Fitch.

The Virginia Resources Authority will round out of the Southeast activity with its $219 million sale of infrastructure revenue bonds expected to be priced on Thursday in a two-pronged deal senior managed by Citi.

The structure consists of two series - $150 million of senior bonds and $68 million of subordinated bonds - both of which will include serial bonds maturing from 2009 to 2023 with term bonds in 2023, 2028, 2033, and 2038. The senior bonds have natural triple-A ratings from Moody's and Standard & Poor's, while the subordinate bonds have a Aa2 rating from Moody's and a AA from Standard & Poor's.

Michelle Kaske contributed to this column.

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