Estimates for municipal bond volume are expected to ratchet up this week.
An anticipated $8.26 billion in long-term bonds should reach the market, versus a revised $7.54 billion last week.
The market anticipates volume increases, as autumn is traditionally a heavy period for muni issuance, industry watchers say. Even so, issuers well know that investors continue to sit atop mountains of cash in need of investing while tax-exempt yields linger above record lows.
The Dormitory Authority of the State of New York should pace all issuers as it is expected to price $887 million of personal income tax revenue bonds in three series. It heads a calendar that market pros say should be absorbed without difficulty.
“We’re going to do well; we’ve got good demand,” said Chris Mier, a managing director in the analytical services division at Loop Capital Markets. “We’ve seen ratios come down a lot. There was more than a little bit of selling [last] week, but prices held up quite well.”
Douglas Gaylor, a portfolio manager at Principal Global Investors, agreed. “Traditionally, October into early November is an active issuance time anyway,” he said. “And the calendar is usually fairly heavy. Performance actually has, in the past, lagged, due to that heavy supply. But I would be surprised if that occurred this time, because there just seems to be a tremendous amount of demand for municipal bonds.”
Issuance estimates show $1.46 billion of competitive offerings scheduled for sale, compared with a revised $1.34 billion last week. Also $6.80 billion negotiated deals are slated for sale, versus a revised $6.19 billion last week.
The calendar boasts a good variety of issues, Mier said. There appears to be no overlap, in terms of purpose, geography or much else, he added, with double-A, or high-A-rated paper and a solid smattering of general obligation bonds ranging between $100 million and $500 million.
No billion-dollar deals grace the calendar this week, but a large DASNY issue should lead negotiated deals this week. Bank of America Merrill Lynch is expected to price $887 million of DASNY personal income tax revenue bonds. The bonds are rated triple-A by Standard & Poor’s and AA by Fitch Ratings.
A retail order period should be held Wednesday, with pricing for institutions following one day later. The bonds are expected to arrive structured as serials and terms in three series, including $826 million of tax-exempt and just more than $61 million in taxable bonds.
The DASNY paper should be a bellwether, Gaylor said, as it represents a very strong credit. “And it’s also exempt from New York,” he added, “which is a large state with a heavy demand.”
Jefferies & Co. follows with an expected pricing of $725 million of Massachusetts School Building Authority revenue bonds. The bonds are rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s and Fitch.
The bonds should arrive Thursday. They are expected to be structures as serials maturing from 2017 through 2020, and from 2027 through 2030.
Barclays is expected to price $700 million of Denver city and county revenue bonds for the Department of Aviation Airport System. The credits are rated A1 by Moody’s and A-plus by Standard & Poor’s and Fitch.
The bonds should arrive Wednesday. They are expected to come in three series: one taxable, one tax-exempt, and another that’s tax-exempt and subject to the alternative minimum tax.
On the competitive side of the ledger, the South Carolina Transportation Infrastructure Bank is expected to auction $432.3 million of revenue refunding bonds. The bonds are rated A1 by Moody’s and A by Fitch. They should arrive Wednesday, structured as serials, maturing from 2013 through 2033.