Many investors will set their sights on Washington this week, where the pricing of $1.1 billion of taxable general obligation Build America Bonds is expected to be a record-setting event for both the state and the market — even though overall volume is expected to dip noticeably from last week.

The bonds will arrive amid an estimated $6.67 billion in total new volume expected to be priced this week, according to Ipreo LLC and The Bond Buyer. The total is down significantly from last week’s revised $9.63 billion, according to Thomson Reuters.

The Washington deal is the state’s largest-ever bond issue, and only the second negotiated one from the state treasurer’s office since 1996.

It is also the fourth-largest BAB deal of 2010, and the highest-rated of all of this year’s billion-dollar-plus offerings, according to Thomson.

Both Standard & Poor’s and Fitch Ratings rate the bonds AA-plus. Moody’s Investors Service rates them an equivalent Aa1.

Washington’s direct-pay BABs are double-barreled — not only are they backed by the state’s full faith and credit pledge, but they also are secured by a first lien on revenues from a 37.5-cent per-gallon fuel tax. The proceeds will finance various transportation projects.

Bank of America Merrill Lynch and JPMorgan are the co-senior managers of the deal, which is expected to be priced tomorrow. It is structured as serial bonds maturing from 2016 to 2024 with term bonds in 2031 and 2040.

A handful of large Northeast offerings are expected, the largest of which will be an $800 million competitive sale from the Dormitory Authority of the State of New York on Wednesday of personal income tax revenue bonds designated as direct-pay BABs.

The deal will be one of three large offerings sold by DASNY this week. It is also planning to issue $336.7 million of new-money and revenue refunding bonds on behalf of Mount Sinai Hospital Obligated Group.

The bonds are planned for pricing by Goldman, Sachs & Co. on Wednesday following a retail order period tomorrow. They are structured as serials maturing from 2012 to 2020 with a term bond in 2026. The bonds are rated A2 by Moody’s and A by Fitch.

In addition, DASNY is also scheduled to issue $285 million on behalf of Cornell University on Thursday.

The negotiated deal is being senior-managed by Bank of America Merrill. It has a structure of term bonds maturing from 2032 to 2040. The bonds are rated Aa1 by Moody’s and AA by Standard & Poor’s.

Meanwhile, New York’s Empire State Development Corp. is preparing to issue $503.1 million of service contract revenue refunding bonds in a two-pronged deal. Wells Fargo Securities is expected to price the bonds on Wednesday following a retail order period tomorrow.

The ESDC deal, which is structured to mature serially from 2011 to 2022, will consist of $221.7 million of Subseries 2010 A-1 bonds and $281.4 million of Subseries 2010 A-2 bonds.

The bonds are expected to carry ratings of AA-minus from Standard & Poor’s and Fitch. They are secured by annual legislative appropriations from the general fund pursuant to a service contract between the New York State Urban Development Corp. — doing business as the ESDC — and the New York director of the budget.

A $313.8 million sale of mortgage revenue bonds from the Montgomery County, Pa., Industrial Development Authority, insured by the Federal Housing Administration, will round out the region’s activity.

The Goldman-led deal is expected to be priced on Wednesday with ratings of Aa2 from Moody’s and AA from Standard & Poor’s. It is structured to mature serially from 2013 to 2038.

In the Southwest, Arizona will kick off a trio of regional deals as it prepares to sell $449.2 million of state lottery revenue bonds tomorrow in a JPMorgan-led offering. The bonds, which are rated A1 by Moody’s and AA-minus by Standard & Poor’s, are structured to mature serially from 2013 to 2029.

Two other Southwest deals will offer more yield than the generic triple-A rated market for investors willing to buy lower-rated bonds for a large state utility company.

JPMorgan will price two separate deals for the New Mexico Public Service Co., both of which are expected to be rated Baa3 by Moody’s and BB-plus by Standard & Poor’s and are likely to come uninsured.

The larger of the pair will total $343.5 million and will be issued by Farmington, N.M., as pollution-control revenue refunding bonds on behalf of the utility company’s San Juan Project.

That deal will consist of five series of refunding bonds totaling $332.1 million that are not subject to the alternative minimum tax and one series of refunding bonds totaling $11.5 million that is subject to AMT.

In addition, Maricopa County, Ariz., will issue $60.3 million of pollution-control revenue refunding bonds for the company’s Palo Verde project.

The structures of both deals were still being finalized at press time.

Last week, the market saw a supply bonanza as the calendar swelled to its heaviest in over a month, aided by the arrival of $1.14 billion of future tax-secured BABs and tax-exempt bonds from the New York City Transitional Finance Authority and $1 billion of taxable and tax-exempt Pennsylvania GO bonds.

Approximately $8.31 billion was anticipated to come to market overall, but volume surpassed that expectation by $1.32 billion — primarily due to the arrival of the large Northeast deals.

Next week, volume might continue to decrease as it typically does when issuers time deals around the shortened Memorial Day week.

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