Primary market volume should increase substantially this week.
Potential issuance is expected to total $8.64 billion, up from total sales of $4.04 billion last week. The calendar boasts a wave of heavier issues in the negotiated market, led by an expected $1 billion of Metropolitan Transportation Authority revenue refunding bonds.
The surge should meet ample demand, industry watchers say, which has built up throughout the spring and remained through the recent weeks' meager calendars. Muni inflows continued for the 22nd straight week, as well as for 51 of the past 54 weeks, according to Lipper FMI numbers.
The market was expecting the volume to rise soon, said James Colby, a portfolio manager and senior municipal strategist at Van Eck Global.
"Everybody knew it was building and heading toward some greater volume," he said. "And with the knowledge that we've had so many consecutive weeks of inflows, the measuring point indicates continued strong support of munis, in terms of cash flows. The market is perfectly capable of absorbing supply that's in the $5 billion-to-$8 billion range."
There are $7.64 billion of muni bond sales scheduled for negotiated sale this week, versus a revised $2.70 billion sold last week. Bonds scheduled for competitive sale this week should slip to $999 million, down from $1.34 billion last week.
The expected new deals should run the credit spectrum, Municipal Market Data analysts Randy Smolik and Domenic Vonella wrote in a research report.
"The list of new issues over the next week includes a breadth of credit ratings which will certainly test sales teams," they wrote, "but the wild card will be whether the grab for yield trade is still intact."
Most of the week's heavy issues should arrive on the negotiated side. Morgan Stanley aims to price the largest, $1 billion of New York MTA transportation revenue refunding bonds. They are rated A2 by Moody's Investors Service and A by Standard & Poor's and Fitch Ratings.
A retail order period is expected for Wednesday. Institutions will have their shot at the credits on Thursday.
Bank of America Merrill Lynch should price $716 million of California's Bay Area Toll Authority revenue bonds, rated Aa3 by Moody's, AA by Standard & Poor's and AA-minus by Fitch.
B of A is holding retail order periods on Tuesday and Wednesday; institutions may participate starting on Thursday. They are expected to arrive structured as serials, maturing from 2017 through 2031.
Citi is expected to price $636 million of Broward County airport system revenue bonds, in two series, including one subject to the alternative minimum tax. The bonds are rated A1 by Moody's, A-plus by S&P and A by Fitch. They are expected to arrive Wednesday, structured as serials, maturing in 2013 through 2032, as well as terms in 2037 and 2042.
Siebert Brandford Shank & Co. should price $570 million of Connecticut general obligation and GO refunding bonds in three series. The bonds, scheduled to arrive Thursday following a two-day retail order period, are rated Aa3 by Moody's and AA by Standard & Poor's, Fitch Ratings and Kroll Bond Rating Agency.
The first two series of GOs, at $500 million, should arrive structured as serials, maturing from 2013 through 2019 and from 2020 through 2032. The third series of GO refunding bonds, at about $70 million, should come structured as serials, maturing from 2013 through 2015.
On the competitive side, the only deal of any size hails from Nevada. The Clark County School District is expected to auction $193.7 million of general obligation limited-tax refunding bonds.
The bonds are rated Aa3 by Moody's, AA-minus by S&P, and A-plus by Fitch. They should arrive Tuesday, structured as serials.