In what’s easily the largest deal of the year, Illinois is set to come to market with $4.5 billion of general obligation bonds that will help pay down a bill backlog that’s around $15 billion. The lowest-rated U.S. state has momentum going its way after last week’s successful $1.5 billion competitive GO sales -- and Illinois is hoping that success spills over into this week’s negotiated offering.
The primary market is getting something it has been seeking for a while, with $10 billion of new supply on the docket. The New York City Transitional Finance Authority, California and Illinois are set to bring almost half of the week's supply.
As Illinois’ Cook County looks set to repeal its unpopular penny-an-ounce sweetened beverage tax, cities and states around the country that have pondered such a revenue-raiser are looking at what this could mean.
The state still lacks a budget as Democratic Gov. Dannel Malloy vetoed a Republican-crafted $40.7 billion biennial spending plan. Meanwhile, capital Hartford spirals toward a possible bankruptcy. Mayor Luke Bronin says increased state aid, bondholder flexibility and labor concessions are all needed to keep the city out of Chapter 9.
The primary muni market is set to break the pattern of low and slow volume and give market participants a variety of options to put their money to work. The timing of the almost $10 billion in weekly volume will help close the third quarter on a high note.
After a short week with slow and low volume, the primary municipal bond market with get a normal dose of issuance this week when there is cash to be put to work. Market participants' eyes will be on New York City, which is set to bring more than $1 billion.
The State of California is expected to wet the whistle of investors when it brings a scheduled $2.5 billion deal to a supply-strapped market. Paper from the Golden State is usually well sought after, and with compressed spreads and investors sitting on cash, demand should be even greater.