After a brief bounce in volume last week, the municipal market could be lulled back into its recent slumber as only $1.93 billion is expected to be priced in the primary this week, according to Ipreo LLC and The Bond Buyer.
If actual volume doesn’t sway too much from the estimate, supply could drop to one of the lowest levels of the year — somewhere between the $2.71 billion that was priced the week of Feb. 7 and the less than $400 million that crawled into the post-holiday market the week of Jan. 3.
Last week’s temporary supply blip saw a revised $4.72 billion come to market, according to Thomson Reuters. That was considered a noticeable surge given how sparse the calendar has been lately. Still, it was only slightly more than half of the $8 billion weekly average that was typical in the fourth quarter.
“The calendar is pretty light and retail is still extremely selective,” said Howard Mackey, president of the broker-dealer unit of Rice Financial Products. “Beyond high-grades it’s hard to get retail’s interest.”
“The market saw some deterioration of the MMD scale at the end of the week and we’re not getting any help from the Treasury market. To get deals done in this market, deals are going to have to be priced in an attractive manner to get customer interest,” Mackey added.
With so little on the calendar, deals such as a $291.3 million revenue sale from Florida’s Sunshine State Governmental Financing Commission will be thrust into the spotlight. The deal, which is slated for pricing by JPMorgan on Monday for retail investors and for institutional investors onTuesday, consists of $253.21 million of bonds that will refund outstanding commercial paper notes sold by the commission on behalf of Miami-Dade County over the last 15 years, while two other series each totaling $19.05 million will convert existing weekly floaters to fixed-rate mode. The bonds are rated Aa3 by Moody’s Investors Service and A-plus by Standard & Poor’s.
Elsewhere in Florida, Collier County Industrial Development Authority is gearing up to sell $102 million of health care facility revenue bonds on behalf of the NCH Healthcare Group. Morgan Stanley is expected to price the deal on Tuesday, though the structure and ratings were unavailable at press time.
In the Midwest, Whiting, Ind., will issue $200 million of environmental facilities revenue bonds on Tuesday on behalf of the BP Products North America Inc. project. The bonds, which are slated to be priced by Goldman, Sachs & Co., are rated A2 by Moody’s and A by Standard & Poor’s and are not subject to the alternative minimum tax. Outstanding variable-rate demand bonds are being remarketed and converted to fixed rate and likely come as bullet maturities in five and 10 years.
Meanwhile, San Jose, Calif., is expected to sell $118 million of special hotel tax revenue bonds in a negotiated deal planned for pricing by Bank of America Merrill Lynch on Wednesday after a retail order period on Tuesday. The bonds are rated A2 by Moody’s and A-minus by Standard & Poor’s.
In other negotiated activity, San Antonio will sell a two-pronged financing totaling $103 million. The deal is backed by the Texas Permanent School Fund guaranty, and carries its triple-A rating by all three major rating agencies.
It is comprised of $97.78 million of tax-exempt refunding bonds and $5.3 million of taxable refunding debt, and will be priced by Loop Capital Markets LLC on Tuesday as serial bonds maturing from 2014 to 2029.
In the competitive market, a $178 million general improvement bond sale from Anne Arundel County, Md., is scheduled for bidding on Wednesday. The two-pronged deal consists of $131.99 million of serial bonds maturing from 2012 to 2031, and $47.60 million of serial bonds maturing from 2012 to 2041.
In addition, the Suffolk County, N.Y. Water Authority is on tap to sell a three-pronged financing consisting of water revenue refunding bonds and bond anticipation notes totaling $123.55 million.