There will be several significantly sized offerings this week, including a pair of $2 billion financings — one in California and the other in Florida — that will join other large deals in the primary market.
An estimated $10.6 billion in new, long-term volume, is expected this week, according to Ipreo LLC and The Bond Buyer.
The lofty estimate is more than double the revised $5.13 billion in new volume that was priced last week, according to Thomson Reuters.
California and Florida’s Citizens Property Insurance Corp. will head up activity, each with a $2 billion sale.
California’s general obligation deal is being senior-managed by Bank of America Merrill Lynch. It is expected to be rated Baa1 by Moody’s Investors Service, AA-minus by Standard & Poor’s, and BBB by Fitch Ratings. The structure and other details were still being discussed at press time.
The $2 billion CPIC financing will be priced by JPMorgan and Goldman, Sachs & Co. tomorrow. It will consist of high-risk account senior-secured bonds that are rated A2 from Moody’s and A-plus from Standard & Poor’s.
The deal is divided into four series of bonds and includes short-term notes and floating-rate notes. The sizes and amounts of the series, as well as the maturity structure, were not available at press time.
The debt is being issued to provide resources to help the corporation meet its potential claims-paying needs for the 2010 hurricane season.
Meanwhile, a California airport financing and a Puerto Rico utility deal, as well as a handful of smaller transportation, higher education, public facilities, and GO offerings, will add to the volume this week.
The Los Angeles Department of Airports is planning to bring $897.8 million of senior revenue bonds that will be priced by book-runner Siebert Brandford Shank & Co. on Wednesday.
The debt is rated Aa3 by Moody’s and AA by Standard & Poor’s and Fitch. It is secured by a first lien on pledged revenue and is being sold on behalf of the city-operated Los Angeles International Airport to pay or reimburse the department for capital expenditures incurred at LAX, such as terminal projects, as well as to refund certain subordinate commercial paper notes, to make a deposit to the senior revenue fund, to fund a portion of interest on the 2010 A bonds, and to pay costs of issuance, according to preliminary official statement.
Last week, JPMorgan priced $447.6 million of second series revenue refunding bonds for the San Francisco Airport Commission. The deal had a final 2027 maturity that carried a 4.30% coupon priced to yield 4.42% and was rated A1 by Moody’s, A by Standard & Poor’s, and A-plus by Fitch.
The market could also see the pricing of $668.7 million of airport system revenue bonds from the Hawaii Department of Transportation, which operates and maintains five primary and 10 secondary airports. Citi is expected to price the bonds on Wednesday, following a retail order period tomorrow.
The financing consists of $500.1 million of Series 2010A bonds not subject to the alternative minimum tax and structured to mature from 2011 to 2025, with term bonds in 2030, 2035, and 2039, and $168.5 million of Series 2010 non-AMT refunding bonds structured as serial bonds from 2012 to 2020, according to the POS.
The special limited obligations of the state are payable from airport system revenue and aviation fuel tax receipts. They are being issued to finance capital improvements and refund outstanding Series 2000A and B debt.
The bonds are rated A2 by Moody’s, A-minus by Standard & Poor’s, and A by Fitch.
The Puerto Rico Electric Power Authority is also readying an $850 million power revenue sale, which is expected to be priced by JPMorgan on Thursday with a tentative structure that includes bonds maturing from 2032 to 2040.
The bonds are rated A3 by Moody’s, and BBB-plus by Standard & Poor’s and Fitch. They are secured by net revenue of the authority’s electric generation, transmission, and distribution system, and are being issued to repay lines of credit from certain private banks and the Government Development Bank of Puerto Rico used to finance a portion of certain capital improvements and for corporate purposes.
The bonds come to market as the authority struggles to increase its net revenue and avoid declines in electric energy sales revenue that have been problematic in the recent past.
For the first seven months of fiscal 2010, net revenue was $430.2 million — an increase of $57.7 million or 15.5% over the same period in fiscal year 2009, according to the POS.
As of Jan. 31, the authority experienced net revenue of $58.1 million, an increase of $17 million or 41.2% compared with Jan. 31, 2009. The increase was supported by a 4.7% rise in electric energy sales mainly in the residential sector, as well as a decrease in administrative and general expenses of $3.2 million.
Issuers in two of the nation’s major cities will sell debt to finance transportation needs. The larger of the deals is a $550 million revenue bond sale from the Chicago Transit Authority being planned for pricing by Goldman Sachs either today or tomorrow.
The deal will consist of Series 2010 A sales tax receipt revenue bonds, which are tax-exempt, and are structured to mature from 2015 to 2019, and Series 2010B taxable Build America Bonds, which are slated to mature serially from 2020 to 2025 with a term in 2040.
The bonds, which are for transportation expenditures and projects, are expected to be rated A1 by Moody’s and AA by Standard & Poor’s, according to the POS.
New York’s Metropolitan Transportation Authority, meanwhile, will sell $475 million of revenue anticipation notes in a Citi-led deal planned for pricing tomorrow, maturing in 2011, and rated MIG-1 by Moody’s.
The notes, which are special obligations payable solely from certain general operation subsidies, are being sold to finance a portion of operating and maintenance expenses of the transit and commuter systems.
One of the only other sizable negotiated deals expected is a $373.2 million refunding from the University of Texas Board of Regents, which is being planned by senior manager RBC Capital Markets for pricing on Tuesday.
Rated triple-A by all three rating agencies, the deal is expected to be structured with serial bonds maturing from 2010 to 2024. It consists of all tax-exempt bonds.
South Carolina will dominate the activity in the competitive market, with five different series of GOs for economic development, transportation, and higher education.
The largest of the deals is $336.4 million of GO refunding bonds planned for Thursday and maturing from 2011 to 2021, which will follow $170 million of GOs for economic development selling tomorrow and maturing from 2011 to 2025.
In addition, on Wednesday the state will also sell two additional, $50 million GO deals, one for economic development purposes and one as air carrier hub terminal facility bonds. Both mature from 2011 to 2025.
A $54 million GO sale from the state is also planned for bidding on Wednesday. However, these bonds mature from 2011 to 2030 and are being sold as state institution bonds on behalf of the Coastal Carolina University.
