Municipal volume is forecast to slip to $6.32 billion in the coming week, falling below $8 billion for the first time since the July 4 holiday week.
About $8.39 billion came to market in the past week, according to Thomson Reuters. That may prove to be the peak of weekly issuance for the remainder of the year, said Dan Heckman, senior fixed income strategist at U.S. Bank Wealth Management. "There might be another week or two of issuers trying to scramble and get ahead of an impending rate hike, but I think somewhere in the $5 billion to $6 billion range might become the norm," he said in a phone interview. "Refundings likely have begun to ebb here, and we will see that play out in a stronger fashion."
Estimated volume for the week of July 27 includes of $5.12 billion of negotiated deals and $1.20 billion of competitive sales, according to Ipreo and The Bond Buyer. The slate is headlined by the Michigan Building Authority and New York City.
On Thursday, JPMorgan will price the largest deal of the week -- Michigan State Building Authority's $990 million of Series 2015 I revenue and revenue refunding bonds. The issue, is currently structured as serials running from 2015 through 2050, is rated Aa3 by Moody's Investors Service, A-plus by Standard & Poor's and AA-minus by Fitch Ratings.
The deal that will mark the state building authority's largest borrowing to date. The state said it expects to see $64 million in net-present value savings from refunding fixed-rate bonds originally issued in 2005, 2006 and 2008. After the sale, all of the authority's $3 billion of debt will be organized under one master indenture from 2003.
The second largest deal is New York City's $750 million of Fiscal 2016 Series A&B general obligation bonds are set to be priced by Siebert Brandford Shank. A retail order period will be held on Tuesday and Wednesday ahead of the institutional pricing on Thursday. The issue is rated Aa2 by Moody's and AA by S&P and Fitch.
Citigroup is expected to price San Antonio, Texas' $422 million of general improvement and refunding combination tax and revenue certificates of obligation. The issue is tentatively structured as $43 million of taxables due 2016 to 2035 and $379 million of tax-exempts due 2016 to 2035. The bonds, which are set to be priced on Tuesday, are rated triple-A by Moody's, S&P and Fitch.
This deal will bring the Alamo City's new money and refunding issuance for the month to nearly $1 billion.
According to said San Antonio chief financial officer Ben Gorzell, the GO deal will include $250 million of new money and $200 million or more in refunding. "The new money will include $85 million of certificates of obligation and about $45 million for upgrades to the Alamodome stadium," he said.
Citi is also slated to price the New York City Industrial Development Agency's special facilities revenue bonds for American Airlines. The deal, which has a one-year hard put, is expected to be priced on Wednesday.
The biggest competitive deal is $290 million Virginia College Building Authority Series 2015D educational facilities revenue bonds under the 21st Century College and Equipment Program. The issue is rated AA-plus by Fitch.
"Historically we have been, in favor of the competitive sales as we are not trying to time the market," said Michael Walsh, public finance manager, for the Virginia College Building Authority. "We typically finance things as we need cash."
VCBA, which came to market with a negotiated deal in April, sees a number or reasons for issuing again now, Walsh said.
"This gets us out in front of the Fed meetings for the week and any possible rate hike if they do something this fall," he said. "There is also a lot of cash on hand and July is a big redemption month in Virginia and we are optimistic we will have a good sale."
