New-issue volume is slowly starting to ratchet upward.

Long-term municipal bonds expected to be sold this week total $5.2 billion, according to The Bond Buyer and Ipreo, versus a revised $4.13 billion last week.

Digging deeper into the numbers, $661.1 million of competitive offerings are scheduled for sale, compared with a revised $1.17 billion last week.

In addition, $4.53 billion of negotiated deals are slated for sale, versus a revised $3.05 billion last week.

The Puerto Rico Aqueduct and Sewer Authority and the Dormitory Authority of the State of New York will lead the way with the year’s biggest bond offerings so far.

But according to one industry pro, a $385 million negotiated issuance of Tennessee general obligation debt should reach the market’s sweet spot, as a block of high-grade credits from a name that’s spread among relatively few investors.

Muni yields rose throughout week through Thursday, marked by a lack of supply and richer ratios to Treasuries.

Demand has held steady, particularly through eight years, said Adam Mackey, portfolio manager and head of muni fixed income at PNC Capital Advisors.

Muni bond mutual funds continue to see inflows. But investors likely won’t throw all of this cash into the marketplace and really move the market.

“A lot of the cash is waiting on the sidelines for higher rates and more supply so we can reprice the market a little bit,” Mackey said.

Some heavy-hitting negotiated deals are expected for the week. The Puerto Rico Aqueduct and Sewer Authority is expected to weigh in with the largest deal so far in 2012 on Wednesday, with Bank of America Merrill Lynch expected to price $1 billion of Series 2012A senior-lien revenue bonds.

The bonds are rated Baa2 by Moody’s Investor’s Service, BBB-minus by Standard & Poor’s and BBB by Fitch Ratings.

On Wednesday, the underwriter is also expected to price $250 million of Series 2012B taxable senior-lien revenue bonds for the sewer authority.

Citi follows with an expected pricing of $830 million of DASNY third general resolution revenue bonds, Series 2012A.

The bonds, which are expected to be structured with serial maturities, are rated AA-minus by Standard & Poor’s and Fitch.

Institutional pricing is set for Wednesday, following a Tuesday retail order period.

JPMorgan is expected to price $$440.8 million of Series 2012B Dallas-Fort Worth International Airport joint revenue refunding bonds.

The bonds are rated A1 by Moody’s and A-plus by S&P and Fitch.

The bonds should arrive on Wednesday. They are expected to be structured as serials, from 2012 through 2035.

JPMorgan is also expected on Tuesday to price a $385 million GO refunding for Tennessee.

The bonds are rated triple-A by Moody’s and Fitch, and AA-plus by S&P. They are expected to be structured as serials, from 2016 through 2027.

The Tennessee and the Dallas-Fort Worth bonds should be well-received, PNC’s Mackey said. In the Tennessee deal, he sees a GO state that doesn’t issue much debt, as well as a serial deal with good block-size pieces — bonds of a size greater than 10 million.

What’s more, the offering is considered a diversifier. Few in the market are full on Tennessee debt, Mackey noted, while many have books laden with credits from New York, California, Washington and some of the larger issuers.

“But this deal is right in the strike zone for many people who want to put money to work,” Mackey said. “You’ve got 50-million-bond blocks starting in 2019 out to 2025.”

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