Volume will decline to a little more than $3 billion this week as the market takes a breather after deals from Puerto Rico, California and Chicago inflated last week's pricing calendar.
This week's volume is forecast at $3.28 billion, led by deals from Wisconsin and New York, according to Ipreo LLC and The Bond Buyer. The projected volume is a far cry from the $11.37 billion that arrived last week,according to Thomson Reuters, after the trio of deals were upsized to meet demand from investors hungry for paper.
A $393.6 million Wisconsin transportation revenue and revenue refunding is the largest deal on the negotiated calendar this week, followed by a $345.49 million offering from the New York State Environmental Facilities Corporation.
The Wisconsin deal will be priced by Jefferies LLC on Thursday with a serial structure from 2015 to 2034. Ratings of Aa2 from Moodys Investors Service and AA-plus from Standard & Poor's and Fitch Ratings are expected. The state also applied to Kroll Bond Rating Agency.
The EFC deal is slated for pricing by Goldman, Sachs & Co. and Rice Financial Products on Tuesday with a serial structure from 2015 to 2034. The state clean water and drinking water revolving fund subordinated revenue bonds are rated triple-A by Moody's and Standard & Poor's and AA-plus by Fitch.
Clark County, Nev., will issue $293 million of airport system subordinated lien revenue bonds, including bonds subject to the alternative minimum tax and non-AMT paper. Bank of America Merrill Lynch will price the bonds on Tuesday with a serial structure and A1 rating from Moody's and A-plus from Standard & Poor's.
With the 30-day visible supply of municipal bonds estimated at just $5.36 billion, investors will be hard-pressed to find a week as bountiful as the prior one.
The $3.5 billion Puerto Rico deal was the largest sale of junk bonds in municipal market history and attracted more than 270 buyers — many of them hedge funds — who submitted $16 billion of orders, allowing the commonwealth tin increase the size of the deal by $500 million.
By Thursday, a secondary rally of the bonds slowed and buyers took profits following a rally that pushed the yield down as much as 45 basis points on Wednesday. They were initially priced at 8.73%, more than 500 basis points above triple-A benchmark bonds and 95 basis points higher than yields in the secondary market on Puerto Rico GOs maturing in 2035, according to Municipal Market Data.
Meanwhile, the California GO issue was increased to $1.8 billion from $1.6 billion and priced a day early. The sale attracted $1.1 billion of retail offers, the third highest total ever for a California GO bond sale.
The sale carried an A1 rating from Moody's and A ratings from Standard & Poor's and Fitch.
Yields -- which tightened between eight and 37 basis points versus the state's October sale -- ranged from 0.07% in 2014 to 4.52% in 2043.
Triet Nguyen, managing partner at Axios Advisors LLC, drew comparisons between the two deals.
"California, once the market's whipping boy for poor fiscal management, has become the golden child again, and it is quite happy to be overshadowed by Puerto Rico in the media headlines," he said in a weekly municipal report on Thursday. "With a revived calendar promoting price discovery and a successful Puerto Rico deal in the record books, the tax-exempt market should be in great shape to absorb whatever bond underwriters may throw at it over the next few weeks," he wrote.
