Following its seasonal Fourth of July volume flameout, primary issuance in the municipal market should return to pre-holiday levels this week.
Industry estimates anticipate $7.07 billion reaching the market. That compares with an anemic $105.7 million of new issuance over the holiday week.
A deal from the New York City Transitional Finance Authority should pace the pack. The agency expects to come to market with $850 million of building and revenue bonds.
This week, $5.59 billion of municipal bonds are scheduled for negotiated sale, versus a revised $66.2 million that were sold last week. Bonds scheduled for competitive sale this week total $1.48 billion, compared with $39.5 million last week.
The $7 billion to $8 billion range for supply is a healthy one for the muniverse, according to Justin Hoogendoorn, a managing director of the Strategic Analytics Group for the BMO Capital Markets fixed-income team. And the market’s technicals remain on sound footing.
“Next week should be fine,” he said. “The relative cheapness of munis in the broader landscape tends to eventually bring larger institutional buyers back to the table.”
In the negotiated market, JPMorgan is expected to price the New York City TFA building and revenue bonds. The bonds are rated Aa3 by Moody’s Investors Service and AA-minus by Standard & Poor’s and Fitch Ratings.
They are expected to arrive Thursday, following a two-day retail order period starting Tuesday.
In addition, JPMorgan should price $428 million of Tennessee State School Bond Authority higher education facilities second program bonds in tax-exempt and taxable series. The bonds are rated Aa1 by Moody’s, AA by Standard & Poor’s and AA-plus by Fitch.
Two tax-exempt series weigh in at $323.2 million. A taxable series should arrive at $104.1 million. They are expected to arrive on Wednesday for retail, with institutions having their chance to participate on Thursday. They should be structured as fixed-rate term bonds with annual maturities.
Citi is expected to price $399 million of Las Vegas Water District general obligation bonds, limited-tax bonds, revenue refunding bonds and revenue water bonds. The debt is rated Aa2 by Moody’s and AA-plus by Standard & Poor’s.
The bonds are expected to arrive Wednesday. They should be structured as both serials, with maturities in 2015 through 2032, and terms, maturing in 2037 and 2042.
Goldman, Sachs & Co., expects to price $335.9 million of water and wastewater system revenue bonds from Austin and Travis, Williamson and Hays counties in Texas. They are rated Aa2 by Moody’s, AA by Standard & Poor’s, and AA-minus by Fitch. The bonds should arrive on Wednesday.
A trader in Los Angeles anticipates that activity in the primary market will pick up this week. Investors should be flush with money and ready to allocate it, he added.
“I haven’t seen anything negative on next week,” he said. “And with July coupon payments coming in this week, I would think we’re about the same as before [as far as demand matching supply].”
In the competitive space, Colorado is expected to auction $500 million of general fund tax and revenue anticipation notes. The debt is rated MIG-1 by Moody’s and SP-1-plus by Standard & Poor’s. The Trans should arrive for bid Tuesday.
Columbus, Ohio, is expected to auction $447 million of various purpose unlimited-tax bonds. The bonds, expected Tuesday, are rated triple-A by the major rating agencies.
Many market participants who responded to Municipal Market Data’s weekly survey on the market’s health said that the coming supply was manageable.
They also spoke of favorable muni ratios to Treasuries and an investor group flush with cash.