Municipal bond volume won't make much of a comeback in the first full week after Labor Day as issuers await a decision on interest rates at the Sept. 16-17 Federal Open Market Committee meeting.
"When you look at the different surveys and predictions on the decision it tells you there is about a 30% chance" that policy makers will raise the benchmark rate from near-zero, said Dan Heckman, senior fixed income strategist at U.S. Bank Wealth Management. "We think it is closer to a 50/50 chance that they might go ahead and lift off."
New issuance is estimated to come in at $4.2 billion for the week, according to Irepo. That would compare with the revised total of $2.29 billion for the holiday shortened week, according to Thomson Reuters.
"It has been telling that we have had a light calendar right in front of the FOMC meeting and even during the week of the meeting," Heckman said. "I am not surprised it is a little bit of a pickup [from the previous week]; but it would seem to me that we would feel a little more of a pickup but I am not surprised given of where we are in the year."
The Texas Transportation Commission plans the biggest deal on the calendar, a sale of $750 million of Series 2015A general obligation mobility fund refunding bonds. The advance refunding, expected to be priced by JPMorgan Securities on Wednesday, is rated triple-A by Moody's Investors Service, Standard & Poor's and Fitch Ratings.
The Texas Transportation Commission will refund $1 billion of general obligation bonds in what is likely the commission's last debt sale of the year.
The deal consists of $750 million of Series A bonds scheduled to price the week of Sept. 14 and $250 million of Series B that will be privately placed, according to the Texas Department of Transportation, the agency governed by the TTC.
With this issue, TTC will remain the largest volume issuer in The Bond Buyer's Southwest region with $3.4 billion of new money and refunding bonds in 2015.
All of the the week's larger negotiated issuers will all be priced on Wednesday, the day FOMC makes its mid-afternoon announcement.
"I can understand underwriters being careful of bringing deals and then having them get hung up if the Fed did do something that is disruptive to the bond market," Heckman said.
Barclays Capital is slated to price the Illinois Finance Authority's $368 million of Series 2015A revenue bonds for OSF Healthcare. The issue is rated A2 by Moody's and A by both S&P and Fitch.
Citigroup is set to price the Los Angeles Department of Water and Power's $271 million of power system revenue bonds. The bonds are rated Aa3 by Moody's and AA-minus by S&P and Fitch.
Citi is also expected to price Philadelphia's $225 million of GOs. The issue is rated A2 by Moody's and A-plus by S&P and Fitch and is expected to mature serially from 2016 through 2035.
Citi will complete a hat trick, pricing Illinois' Metropolitan Pier and Exposition Authority's $222 million of bonds for the McCormick Place expansion project. The issue is comprised of current interest bonds and capital appreciation bonds.
In the competitive arena, the state of Ohio is coming to market with three separate sales totaling about $250 million on Tuesday. The sales consist of $150 million of Series 2015B general obligation infrastructure improvement bonds, $50.49 million of Series 2015C GO infrastructure improvement refunding bonds, and $50 million of Series 2015B GO conservation projects bonds.
The issues are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
On Monday, the Johnson County Unified School District No. 229, Kan., is selling two separate sales in the competitive arena totaling about $163 million. The sales consist of $92.2 million of Series 2015A GO school bonds and $70.26 million of Series 2015B GO refunding bonds. Both issues are rated triple-A by Moody's and AA-plus by S&P.
