In the absence of any billion-dollar deals this week, a handful of significantly smaller financings will be priced into a relatively quiet primary market where an estimated $3.29 billion in new issues is expected. The volume compares to last week when a revised $3.45 billion in total competitive and negotiated new issues came to market, according to Thomson Financial.
This week, the activity will be led by a new-money and refunding sale of airport revenue bonds from the Airport Commission of the City and County of San Francisco, which is expected to be priced either Wednesday or Thursday by Citi.
The deal — which is fixed rate and is being sold on behalf of the San Francisco International Airport — is tentatively structured to mature from 2012 to 2022, and includes both bonds subject to the alternative minimum tax and non-AMT bonds. The deal, which will range in size between $260 and $300 million depending on market conditions, is insured by Assured Guaranty Corp., and the bonds have underlying ratings of A1 from Moody’s Investors Service and A from Standard & Poor’s.
The airport commission is also is slated to issue a total of $169 million of second-series, variable-rate revenue refunding bonds this week in a three-pronged deal tentatively set for Thursday.
Citi will price the $69 million Series A bonds, while Banc of America Securities LLC and Morgan Stanley & Co. will each price $50.8 million in Series B and Series C.
Meanwhile, a $232.2 million unlimited tax general obligation refunding from King County, Wash., is slated to be priced today by Goldman, Sachs & Co. Rated Aa1 by Moody’s, natural AAA by Standard & Poor’s, and AA-plus by Fitch Ratings, the deal is structured to mature from 2009 to 2028, with a term maturity in 2034.
Elsewhere in the region, the Santa Clara County Financing Authority, Calif., is planning to issue $124.9 million of lease revenue refunding bonds tomorrow in a deal being priced by Banc of America. Structured to mature from 2008 to 2022, the bonds carry a Aa3 rating from Moody’s and a AA rating from Standard & Poor’s.
In the Southwest, a pair of Texas deals planned for this week will give investors a choice between starkly different credits.
A $175 million sale of high-quality GOs from the city of Austin is expected to be priced tomorrow by Lehman Brothers with a structure that runs from 2008 to 2021. The city’s GOs recently received an upgrade from Standard & Poor’s to triple-A from AA-plus in advance of the sale, and are also rated AA-plus by Fitch. Moody’s rates Austin’s GO credit at Aa1, but as of late last week had not yet announced its rating on the new issue.
By contrast, $157 million revenue sale from the Harris County, Tex., Cultural Education Facilities Corp. planned for pricing tomorrow by Goldman, will be rated Baa3 by Moody’s. The Series 2008A bonds are being sold on behalf of the YMCA of Greater Houston and are expected to be structured from 2010 to 2022, with term bonds in 2030, 2038, and 2042.
As a lower investment-grade credit, the bonds are being priced without insurance, which means they will likely offer yields that are considered attractive when compared to the generic, 30-year triple-A GO bond, which ended at a 4.28% yield on Friday, according to Municipal Market Data.
For instance, the 2017 maturity in the Albany deal was priced to yield 4.41% — which was only five basis points cheaper than triple-B health care yields priced by MMD on the same day. The 2022 maturity’s 4.91% yield was three basis points richer than where triple-B hospital credits were priced last Wednesday, according to MMD.
Switching gears to the competitive market, meanwhile, investors will see a mix of essential service, transportation, and housing deals priced this week. A two-pronged GO refunding from the Las Vegas Valley Water District is planned for tomorrow. The larger of the two series is a $192.5 million sale of new-money GOs and refunding bonds that are structured to mature from 2009 to 2038, while the $172.7 million series is a GO refunding that is structured to mature from 2009 to 2026.
The district’s bonds are rated Aa1 by Moodys, AA-plus by Standard & Poor’s, and AA by Fitch.