Municipal bond volume is forecast to hold steady in the coming week after the Federal Open Market Committee decided to keep the benchmark interest rate near zero.
Municipal bond volume for next week is estimated at $4.12 billion, according to Ipreo, consisting of $3.16 billion of negotiated deals and $957.2 million of competitive sales. That compares with total sales of $4.38 billion in the past week, according to Thomson Reuters.
Market observers were divided over how the Fed's decision would affect the muni market.
"With regard to the policy action, we agree that holding rates steady was the appropriate stance to take, especially considering the weakening global outlook and strengthening of the dollar which, Fed Chair Yellen mentioned several times, noting the dampening impact it will have on both inflation and economic growth going forward," said Jim Grabovac, managing director and senior portfolio manager at McDonnell Investment Management LLC. "Looking at Fed Funds Futures would have led one to presume that the market had priced in no change, but gauging from the reaction across the curve, it appears that many market participants expected a quarter point move at this meeting." .
As of market close on Friday, yields on the municipal market data's benchmark AAA scale were as much as nine basis points lower in some maturities than before the Fed meeting.
"If it keeps moving this direction those issues that are day-to-day might come into the market, but it will have to keep going in that direction for the next few days for issuers to start jumping in," said Dawn Mangerson, managing director and senior portfolio manager at McDonnell Investment Management.
"Next week's calendar is similar to what we have been seeing a lot recently: chunky issues from familiar participants, but not a lot of new names. It would be nice if we saw a larger variety of issuers instead of the same ones, however these deals are still getting well over subscribed and people are still going to munis."
Topping the calendar for the week of Sept. 21 is the New York City Transitional Finance Authority, which is selling a total of $1 billion of bonds divided in deals in both the negotiated and competitive sectors.
Goldman Sachs is expected to price the TFA's $750 million of future tax secured tax-exempt subordinate bonds. Retail orders were taken on Friday and will continue on Monday, with an institutional pricing tentatively scheduled for Tuesday.
In the competitive arena, the TFA will sell $250 million of future tax secured taxable subordinate bonds in two separate sales on Tuesday. The sales consist of $190 million of Fiscal 2016 Series A Subseries A2 taxables and $60 million of Fiscal 2016 Series A Subseries A3 taxables.
The bonds are rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's and Fitch Ratings.
Citi is scheduled to price Wayne County's Airport Authority's $588 million of new money and refunding bonds on Tuesday. WCAA officials are highlighting its legal separation from its struggling home county as the operator of Detroit's airport hits the market next week.
The authority expects to save more than $3.5 million annually in debt service from the refunding piece of the deal. Part of the transaction will restructure debt originally issued by the county into debt backed by general airport revenues. The authority says it will save $1 million a year by wiping the county's pledge off the borrowing and replacing it with its own
Wells Fargo Securities is slated to price the San Francisco Bay Area Rapid Transit District's $358.56 million offering, which consists of $187.63 million of sales tax refunding bonds, rated AA-plus by S&P and Fitch, pricing on Tuesday, and $170.93 million of general obligation refunding bonds, rated triple-A by Moody's and S&P, pricing on Thursday.
Goldman is also set to price the Sacramento Public Financing Authority's $274 million of Series 2015 taxable lease revenue bonds for the Golden 1 Center on Wednesday. The bonds are rated A-plus by S&P and A by Fitch.
Barclays Capital is expected to price the Toledo Hospital's $270 million of Series 2015A taxable corporate CUSIP bonds for the ProMedica Healthcare Obligated group on Thursday. The issue is rated Aa3 by Moody's and AA by S&P.
Morgan Stanley is set to price the state of Mississippi's $200 million of Series 2015E gaming tax revenue bonds. The issue is rated A3 by Moody's and A-plus by S&P and Fitch.
In the short-term competitive sector, the state of Massachusetts is selling three separate note deals totaling $1.2 billion on Tuesday. The deals consist of $400 million of Series 2015A general obligation revenue anticipation notes, $400 million of Series 2015B GO RANs, and $400 million of Series 2015C GO RANs. The RANs are rated MIG1 by Moody's, SP1-plus by S&P and F1-plus by Fitch.
