With the Christmas holiday arriving later this week, a year-end lull has settled over the muni market that is likely to last at least until the second week of January as the market puts what has become one of the most eventful and tumultuous years behind it.
There are no sizable deals scheduled for sale in either the negotiated or competitive markets this week - or next week, when the municipal market prepares to ring in the New Year.
According to Thomson Reuters, this week there is an estimated $6.6 million in total new-issue volume expected, versus a revised $3.07 billion last week when the largest negotiated deal was a $100 million general obligation sale from Philadelphia with an underlying GO credit rated Baa1 by Moody's Investors Service, BBB by Standard & Poor's, and BBB-plus by Fitch Ratings.
The deal contained a 2038 final term maturity that was priced with a 7.25% yield and a 7.125% coupon by senior manager Morgan Stanley and was insured by Assured Guaranty Corp.
The only issue listed on the negotiated calendar, compiled by Ipreo, for this week is a $2.5 million capital improvement offering from the Cherokee County, Okla., Rural Water District No. 3 senior-managed by Oklahoma City-based Wells Nelson & Associates LLC.
The deal's timing ahead of the holiday and its nonrated status will make it a challenging deal to price, but Wells underwriter Dwight Von Feldt says the firm is aiming to get the deal done tomorrow if it has attention from investors. The structure will include three or four term bonds out to 2038.
In the competitive market, meanwhile, the only two deals listed for pricing today include a $4 million sale from Fort Bend County, Tex., which is rated BBB-minus by Standard & Poor's, and a $1.2 million sale of warrants from Decatur County, Ind.
Tomorrow, meanwhile, there is a pair of $1 million bond anticipation note deals taking place in New York, including a $1.7 million offering from the Hornell School District, and a $1.5 million sale from the city of Naples.
After the Christmas holiday, the market will remain skimpy ahead of the New Year. Four small deals are expected to be priced on Dec. 30, the largest of which is an $8.7 million offering of tax anticipation notes from York County, Maine.
Also planned for Dec. 30 are a $3.7 million Harris County, Tex., Municipal Utility District deal, a $2.5 million Tan sale from North Tonawanda, N.Y., and a $1.7 million short-term note sales from the Clinton Township, N.J., Board of Education.
The dearth of supply will continue to be problematic the first couple of weeks in January. One of the only sales that could come to market in the first full week of the year is a $14.1 million GO offering from the Bishop Consolidated Independent School District in Texas. RBC Capital Markets LLC is hoping to price the offering during the week of Jan. 5, but placed it on the day to day calendar last week as it awaited approval from the triple-A-rated Permanent School Fund while the state credit enhancer deals with capacity limitations.
So far, a two-pronged Washington GO sale is the first sizable deal planned to take place that week. The deal, which is expected to be competitively priced on Jan. 7, contains two series consisting of $270 million and $130 million each.
The New York City Transitional Finance Authority plans to target individual mom and pop investors with a retail order period on Jan. 9 for its planned $300 million sale of building aid revenue bonds. The deal, which is being senior managed by Citi, is planned for pricing to institutions on Jan. 13 subject to market conditions.
The bonds, which are payable and secured by New York State building aid for educational purposes, are rated A1 by Moody's, AA-minus by Standard & Poor's, and A-plus by Fitch.
With the 30-day visible supply of municipal bonds standing at $11.54 billion, and over 100 bond issues on the negotiated, day-to-day calendar, volume should perk up after the holidays. Dozens of deals were sidelined in the past few months due to the extreme volatility - largely the historical cheapness of municipal securities on an absolute basis, as well as the abnormally high ratio of municipals to Treasuries. Last week that ratio was hovering around 200% on the long end of the market.