With much of the market still in vacation mode following Monday’s Labor Day holiday, Minnesota plans to issue $899.6 million of general obligation bonds in the only sizable deal expected to arrive this week.
The summer doldrums will continue to curtail issuance in a second straight week of otherwise light trading and underwriting activity. Ipreo LLC and The Bond Buyer expect an estimated $3.02 billion in new, long-term volume on the heels of a revised $3.59 billion that actually made its way to the primary market last week, according to Thomson Reuters.
The largest deal last week was a $181.8 million sale of contract tax refunding bonds from the Harris County, Tex., Flood Control District. Goldman, Sachs & Co. senior-managed the triple-A rated deal Aug. 31 with a 2039 final maturity priced to yield 3.94% — 27 basis points higher than the generic triple-A GO scale published by Municipal Market Data at the time of the pricing.
The Minnesota deal will be two-pronged and consist of $681.2 million of Series 2010D various-purpose refunding bonds and $218.4 million of Series 2010E trunk highway refunding bonds. Both are structured to mature serially from 2011 to 2024. The refunding bonds are expected to be rated Aa1 by Moody’s Investors Service, and triple-A by Standard & Poor’s and Fitch Ratings.
Ahead of the deal’s pricing, MMD’s triple-A GO scale in 2024 ended at a 2.68% yield last Friday.
Elsewhere, a handful of utility and power deals are expected to be priced in the Southeast and the Midwest regions.
The North Carolina Eastern Municipal Power Agency is gearing up to sell $182 million of revenue refunding bonds. Citi is expected to price the deal on Wednesday with a structure that includes all tax-exempt debt maturing serially from 2015 to 2021 and in 2023.
The power bonds are expected to be rated Baa1 by Moody’s and A-minus by both Standard & Poor’s and Fitch.
Meanwhile, two Florida utility deals are also on tap. The larger of the pair is $142.8 million of consolidated utility system revenue bonds that will be issued by the state’s capital, Tallahassee.
The deal consists of $110.8 million of federally taxable BABs in Series 2010A that are structured to mature in 2040, and $32 million of tax-exempt debt structured to mature from 2015 to 2028.
The bonds are rated Aa1 by Moody’s and AA-plus by the two other major rating agencies, and are secured by a lien on the net revenues of the city’s utility system and gross revenues of the stormwater drainage system.
Proceeds will finance capital improvements to the utility system.
The Orlando Utility Commission will join the activity with its $108 million sale of utility system revenue refunding bonds to be priced by JPMorgan and structured as serial bonds maturing from 2019 to 2027. The deal is rated Aa1 by Moody’s and AA by Standard & Poor’s and Fitch.
In the Midwest, $120 million of utility system revenue and refunding bonds is expected from Colorado Springs. The negotiated deal is being priced by Piper Jaffray & Co. on Thursday following a retail order period on Wednesday.
The bonds are secured by net revenues from the operation and use of the municipal water, electric light and power, gas, wastewater, and streetlight systems. They are rated Aa2 by Moody’s and AA by Standard & Poor’s and Fitch.
The two-pronged sale consists of $95.22 million of tax-exempt revenue refundings bonds in Series 2010A-1, which are structured to mature serially from 2011 to 2033. Series 2010 A-2 consists of $22.18 million of taxable, direct-pay BABs structured as improvement revenue bonds that will mature serially from 2016 to 2025 with term bonds in 2030 and 2040.
Proceeds of the refunding will be used to retire utility system subordinate-lien improvement and refunding revenue bonds from Series 2001-A maturing Nov. 15, 2010; portions of Series 2001A that mature 2012 to 2029; subordinate-lien bonds in Series 2002B that mature Nov. 15, 2016, to 2023; and the city’s utilities system subordinate improvement revenue bonds in Series 2003 A, which mature Nov. 15, 2010.