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Municipal Experts Cast Predictions for 2016
Tuesday, December 29, 2015
By Christine Albano
Michael Pietronico, chief executive officer, Miller Tabak Asset Management:
Triple-A bonds will outperform triple-B bonds as credit risk takes center stage in the bond market. The municipal yield curve will resume a steepening trend by the summer of 2016 as the economy enters recession. Hospital bonds will be the worst performing sector of the municipal market as the likelihood of a repeal of Obamacare becomes more of a possibility.
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Volume Rises to $6.2B with Connecticut and Washington Leading the Pack
Friday, September 25, 2015
By Chip Barnett and Aaron Weitzman
Prices of top-shelf municipal bonds finished weaker on Friday, traders said, with yields on some maturities rising by as much as two basis points. Traders and other market participants are now turning their attention towards next week deals, in anticipation of some "chunkier" issues.
Municipal volume is estimated at $6.2 billion for the week of Sept. 28, according to Ipreo, compared with a revised total of $4.49 billion that came to market in the past week, according to Thomson Reuters.
"The market is chock full of various issuers coming with large sized issuance," a New York trader said. "Hopefully it will kick start the market and wake it up again, as it has been a little sleepy."
The primary market has seen only couple of large deals in each of the past few weeks, while medium and small deals were more plentiful. This week that trend will reverse.
"Muni issuance will grow but continue to be manageable this week," said Daniel Berger, Senior Market Strategist, Thomson Reuters/Municipal Market Data. Although the week will feature a slightly higher volume total, "it is still under the 2015 averaged issuance of $7.3 billion."
A total of 18 deals of at least $100 million are on the calendar, with the states of Connecticut and Washington leading the pack.
"We expect the new issue market to do reasonably well next week, as the secondary market seems to have thinned out a touch in terms of available supply," said Michael Pietronico, chief executive officer at Miller Tabak Asset Management.
Washington State will be selling a total of roughly $983.28 million which will be comprised of one negotiated offering and four competitive sales. On Monday the state will sell its first ever green bond, as Bank of America Merrill Lynch will be pricing the $39 million of various purpose general obligation green bonds, Series 2016A-2.
On Wednesday, the Evergreen State will be selling four competitive issues. There will be $60.71 million of GO taxable bonds, Series 2016T; $191.99 million of motor fuel tax GO bonds, Series 2016B; $193.77 million of various purpose GO refunding bonds, Series R-2016A; and $497.80 million of various purpose GO bonds, Series 2015A-1. All of the deals are rated Aa1 by Moody's Investors Service and AA-plus by Standard and Poor's and Fitch Ratings.
RBC Capital Markets will be pricing the State of Connecticut's $840 million of special tax obligation bonds for transportation infrastructure, Series 2015 A and Series 2015 B (the B series will be refunding bonds). This deal has a scheduled retail order period on Wednesday followed by institutional pricing on Thursday.
Barclays Capital is expected to price Miami-Dade Co.'s educational facilities authority's $650 million of revenue and revenue refunding bonds for the University of Miami on Wednesday. Tentatively, the deal is split up for $400 million of tax-exempt and $250 million of taxable, Series' 2015A and B.
RBC is also scheduled to price the State of Public Works Board of the California's $551.6 million of lease revenue refunding bonds, Series 2015 F and G. The retail order period is scheduled to take place on Monday, followed by institutional pricing on Tuesday.
Ramirez & Co., is slated to price the Massachusetts Bay Transit Authority's $279.77 million of senior sales tax bonds, Series 2015 A and B on Wednesday.
"We see a bias lately to stronger credits by institutional investors," said Pietronico. "The demand for each deal seems to be reflective of the market's perception of its credit quality. We see a bias lately to stronger credits by institutional investors."
The yield on the 10-year benchmark muni general obligation was one basis point stronger at 2.09% from 2.08% on Thursday, while the yield on the 30-year GO was two basis points stronger at 3.10% from 3.08%, according to the final read of Municipal Market Data's triple-A scale.
On Friday, Sept. 18, the yield on the 10-year muni stood at 2.14% while the yield on the 30-year muni was at 3.13%.
Treasury prices were also lower on Friday after Federal Reserve Chair Janet Yellen said she is ready to raise interest rates this year.
"Most of my colleagues and I anticipate that it will likely be appropriate to raise the target range for the federal funds rate sometime later this year," she said Thursday in a speech in Amherst, Mass.
The yield on the two-year Treasury note rose to 0.69% from 0.68% on Thursday, while the 10-year yield climbed to 2.16% from 2.12% and the 30-year yield increased to 2.95% from 2.90%.
The 10-year muni to Treasury ratio was calculated on Friday at 96.5% versus 98.4% on Thursday, while the 30-year muni to Treasury ratio stood at 104.8% compared to 106.2%, according to MMD.
The Week's Most Actively Quoted Issues
New Jersey and Illinois were some of the most actively quoted names in the week ended Sept. 25, according to data released by Markit.
On the bid side, the New Jersey State Turnpike Authority taxable revenue 7.414s of 2040 were quoted by 13 unique dealers. On the ask side, the New Jersey Economic Development Authority revenue 4 1/4s of 2026 were quoted by 18 dealers. And among two-sided quotes, Illinois taxable 5.1s of 2033 were quoted by 20 dealers, Markit said.
The Week's Most Actively Traded Issues
Some of the most actively traded issues in the week ended Sept. 25 were in New York and California, according to Markit.
In the revenue bond sector, the New York City Transitional Finance Authority 5s of 2035 were traded 86 times. In the GO bond sector, the California 5s of 2045 were traded 66 times. And in the taxable bond sector, the Sacramento Public Financing Authority lease revenue 5.637s of 2050 were traded 22 times, Markit said.
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Muni Market Slows as Summer Nears End
Friday, August 28, 2015
By Aaron Weitzman
Municipal volume is forecast to plunge to the lowest in six months as end-of-summer holidays approach.
There are only four deals greater than $100 million on the calendar for the week of Aug. 31, three of them negotiated deals. The estimated volume for the week is $3.3 billion, according to Ipreo. That's the lowest since revised volume of $3.2 billion the week of Feb. 16, according to Thomson Reuters. The revised total for the past week was $7.81 Billion this week, according to Thomson Reuters.
"We are not surprised by the light volume as markets have been volatile and vacations are plentiful at this point in the summer," said Michael Pietronico, chief executive officer at Miller Tabak Asset Management. "We expect September volume to increase as participants get back to work."
There might be some problems of the market digesting the volume, since a lot of people might be taking some time off of work, with Labor Day right around the corner. "Liquidity is somewhat challenged in the days before summer ends," Pietronico said.
The largest deal of the week, which will be priced by JP Morgan on Wednesday after a one day retail period, will be a $1 billion offering from the Dormitory Authority of the State of New York.
DASNY anticipates that the proceeds will be used to refund certain outstanding bonds issued under various programs, which may include bonds under the Personal Income Tax Revenue Bond Program issued by the Dormitory Authority and the Environmental Facilities Corporation, the CUNY Program, and the Upstate Community College Program. The bonds will be issued under the Personal Income Tax General Purpose Resolution.
"The market has been very volatile this week, but given the strength and familiarity of the Personal Income Tax Program we are optimistic that the sale will go well," a spokesperson for DASNY said. "Market conditions next week will dictate the duration of the retail order period."
The Series 2015E general purpose state personal income tax revenue bonds are tentatively structured as serials running from 2016 through 2037. The deal is rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's.
"We expect this deal to do quite well, as demand for New York paper remains strong," Pietronico said.
The second largest sale of the week will be a competitive offering from the state of Wisconsin, which is selling roughly $391 million of Series 2015C general obligation bonds on Tuesday.
City Securities is slated to price Valparaiso, Ind.'s $143 million multi-school building construction first mortgage bonds on Wednesday. The issue is expected to mature serially from 2018 through 2035. The deal is rated AA-plus by S&P
Barclays Capital will price The Lower Colorado River Authority, Texas, $135 million of Series 2015D refunding revenue bonds on Wednesday. The issue is rated A by S&P and Fitch Ratings and is expected to mature serially from 2016 through 2032.
"We expect 'quality' issuers to be more successful in placing deals at lower interest rates as investors seem to be in a 'risk off' mode before the upcoming September Federal Reserve meeting," he said.
PRASA Still Day-to-Day
To be or not to be, that is the question regarding the Puerto Rico Aqueduct and Sewer Authority's bond offering of $750 million. The deal was supposed to price on the Aug. 18, got pushed back to Aug. 20 and then got pushed back again, with sources saying that they expected the deal to price, but not until after September begins.
"They are saying it's postponed until more clarity is garnered on their restructuring process," a market source said. The reason it fell apart last week is that at the same time they were floating the deal to investors they were filing with US authorities for an appeal to the recent voiding of their restructuring law."
He added: "My gut tells me that they may never get the deal done, but if they do it will have to be at much worse levels. They had been floating 8% at 9.50%. That is just not enough for a basically distressed bond."
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New Jersey Muni Bonds Rally as Yield Premium Wins Over Investors
Thursday, August 27, 2015
By Romy Varghese
(Bloomberg) -- New Jersey Economic Development Authority bonds sold this week are rallying as the yield premium offered over benchmark securities helps to offset concern that the state's pension woes may worsen.
The average yields on the tax-exempt maturity due in June 2037 dropped to 4.87 percent, down 23 basis points from what the securities were initially priced at on Tuesday, according to data compiled by Bloomberg. The yield is about 1.9 percentage points higher than comparable maturity AAA rated benchmark securities.
"It's an awful lot of yield in a market that's starved for yield," said Michael Pietronico, chief executive officer of Miller Tabak Asset Management in New York, who didn't buy any of the bonds. "When you do a negotiated deal of significant size, it's virtually impossible to hit right on the screws, especially in a market that was as skittish this week."
The agency's debt has been the most traded this week, according to data compiled by Bloomberg. The $2.2 billion issue is the largest from the state since 2013. Bank of America Merrill Lynch managed the sale. New York-based spokeswoman Kristen Kaus said Thursday that Bank of America doesn't comment on transactions.
"The tightening of spreads is evidence that there was a large demand for our bonds, showing improved market confidence in New Jersey that will result in lower long-term interest costs for the state and in turn taxpayers," Christopher Santarelli, a spokesman for the Department of Treasury, said in an e-mail.
New Jersey faces financial pressure from an $83 billion deficit in its employee-retirement system, which state leaders have shortchanged for years. The escalating bills to the pension funds have left New Jersey with the second-lowest credit rating among states after Illinois.
The last time a state general-fund tax-backed deal produced a 5 percent yield was an Illinois issue in February 2014, Alan Schankel, a managing director at Janney Montgomery Scott LLC in Philadelphia, said in a note to clients Wednesday.
Proceeds for the New Jersey appropriation bond issue will fund school construction costs, refinance debt and terminate derivative contracts. The bonds are rated A3 by Moody's Investors Service, the company's seventh-highest investment grade.
--With assistance from Brian Chappatta in New York.
To contact the reporters on this story:
Romy Varghese in Philadelphia at +1-267-519-9942 or firstname.lastname@example.org
To contact the editor responsible for this story:
Dave Liedtka at +1-212-617-8988 or email@example.com
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DASNY Pumps Up Weekly Volume to $9.2B
Friday, July 17, 2015
By Christine Albano
A planned $1.2 billion New York State Dormitory Authority sales tax revenue offering will headline the primary market activity in the coming week and help boost new volume to over $9 billion.
The New York offering is part of an estimated $9.16 billion in primary issuance for the week of July 20, according to Ipreo LLC and The Bond Buyer.
That compares with a revised $7.80 billion that sold in the past week, as reported by Thomson Reuters.
There are $7.64 billion of negotiated deals slated for the week of July 20, compared to a revised $6.09 billion in the past week. Bonds slated for competitive sale in the coming week are estimated at $1.52 billion, versus a revised $1.70 billion in the past week.
The large calendar is something the market is craving at this time of the year, municipal sources said.
"The need for paper is out there," said a New York trader in an interview on Friday afternoon. He described the market as quiet, with few bid wanted lists, light trading overall, and volume down as much as 30% from the prior session.
"The New York Dorm deal will add a little bit of excitement, which we could use," he said. "There have been a lot of ground balls and this is a home run," he said of the size of the deal, which is being priced for retail on July 21 and institutions on July 22 by Morgan Stanley and is rated triple-A by Standard & Poor's and AA-plus by Fitch Ratings. The bonds are tentatively structured as serials, maturing from 2016 to 2025.
He said he expects the deal to get placed without much delay.
"There will be some of it on the Street, but that will be temporary, and ultimately it will get placed and not sit around stale," he said.
Michael Pietronico, chief executive officer at Miller Tabak Asset Management, said next week's supply should be well received because the technical conditions of the market remain favorable.
"Our expectation is that shorter maturity bonds will outperform as secondary market float in this range has begun to dry up due to strong seasonal reinvestment demand," he said on Friday.
The dormitory authority comes to market on the heels of being named by Thomson Reuters as the top ranked issuer in the Northeast region year to date, with 24 issues totaling $4.66 billion and an 8.8% market share.
The New York market will also see a $500 million sale of transportation revenue refunding bonds issued by the Metropolitan Transportation Authority.
Siebert Brandford Shank & Co. will conduct a retail order period on July 22, followed by institutional pricing on July 23 for the three pronged structure that includes $400 million of subseries 2015 C-1 fixed-rate bonds, $50 million of subseries 2015C-2 mandatory tender bonds, and $50 million of subseries 2015C-3 LIBOR floating rate tender notes.
The bonds are rated A1 by Moody's, AA-minus by Standard & Poor's, and A by Fitch.
Sharing the spotlight will be the city of Honolulu, which plans to issue new-money and refunding revenue debt totaling $689.11 million in the negotiated market.
Bank of America Merrill Lynch will price the Hawaii sale for institutions on July 22, after a one-day retail order period on July 21.
The financing is structured with five series, consisting of senior lien bonds in a $176 million 2015A new-money tax-exempt revenue series maturing from 2017 to 2045; a $273.9 million 2015B tax-exempt refunding with maturities from 2017 to 2036; and a $99.9 million 2015C series taxable refunding bonds maturing from 2016 to 2045. The junior lien bonds include a $114.5 million 2015A tax-exempt refunding bond series, and a $24.5 million Series 2015B taxable refunding bond series.
The proceeds will finance improvements to wastewater facilities, including $5.9 million in capital improvements through fiscal year 2030. The wastewater revenue senior bonds are rated Aa2 by Moody's Investors Service and AA by Fitch Ratings, while the junior bonds are rated Aa3 and AA-minus, respectively.
The Port of Seattle will sell a total of $592.58 million of revenue debt in a three-pronged negotiated offering slated to be priced by Morgan Stanley & Co. on July 21.
The bonds carry an A1 rating from Moody's Investors Service, and A-plus from both Fitch ratings and Standard & Poor's, and proceeds will refund outstanding debt and finance runway extensions and additional gates at the city's airport.
The sale is comprised of $72.75 million of revenue debt not subject to the alternative minimum tax; $231 million of revenue bonds subject to AMT, and $288.83 million of non-AMT revenue refunding bonds.
The intermediate-lien bonds are supported by the port's revenues after the payment of operating expenses and payments required by first-lien bonds.
Meanwhile, a $300 million sale of revenue bonds will be issued by the Harris County, Tex., Cultural Educational Facilities Authority on behalf of the Houston Methodist Hospital.
Lead book runner Bank of America Merrill will price the offering on Wednesday, and the bonds are rated AA by Standard & Poor's.
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Muni Investors Eager for Week's Supply
Thursday, July 2, 2015
By Aaron Weitzman
Municipal bond issuers may find healthy demand in the coming week, as investors look to put reinvestment money to work.
Volume for the week of July 6 is estimated to come in at $4.9 billion, according to Ipreo and The Bond Buyer, compared with the revised total of $3.6 billion priced for the week of June 29, according to Thomson Reuters. There will be a projected $3.6 billion of negotiated deals and $1.3 of competitive sales.
"We expect to see vibrant demand next week for new issue supply as reinvestment money is in abundance at this time of year due to bonds maturing and paying coupons," said Michael Pietronico, chief executive officer of Miller Tabak Asset Management. "Given the heightened volatility in the equity markets globally it is our sense that the recent rise in yields should draw significant interest from retail and institutional investors."
The biggest deal of the week is coming from the North Carolina Municipal Power Agency Number 1. Its $463.110 million of refunding bonds are scheduled to be priced by Morgan Stanley on Thursday. The issue is initially structured as Series 2015 A, B and C refunding bonds, Series 2015 D taxable refunding bonds and Series 2015 E forward delivery bonds. The issue is rated A by Standard & Poor's and Fitch Ratings.
The Illinois State Toll Highway Authority's $400 million of Series 2015A toll highway senior revenue bonds are expected to be priced by Bank of America Merrill Lynch on Wednesday. The bonds are rated Aa3 by Moody's Investors Service and AA-minus by S&P and Fitch.
This deal is the first of two new-money borrowings to finance a record year of capital spending. The $1.6 billion of capital spending planned this year is part of the 15-year, $12 billion Move Illinois capital program launched in 2011. The authority operates 286 miles of toll highways in 12 counties in northern Illinois.
JPMorgan is slated to price Austin, Texas' $290 million of Series 2015A and taxable Series 2015B wastewater system revenue refunding bonds. The issue is initially structured as serials maturing from 2016 through 2035. The bonds are rated Aa2 by Moody's, AA by S&P and AA-minus by Fitch.
Citigroup is expected to price on Thursday the Colorado Health facilities Authority's $206 million of Series 2015A health facilities revenue and revenue refunding bonds for the Evangelical Lutheran Samaritan Society project on Thursday. The bonds are rated A-minus by Fitch and are expected to mature serially from 2016-2036, with term bonds in 2040 and 2045.
Citi is also set to price the Massachusetts Port Authority's $179 million of Series 2015A non-AMT and Series 2015B AMT revenue bonds on Wednesday. The bonds are rated AA by S&P.
In the competitive sector, the Central Florida Expressway Authority is set to sell $194 million of Series 2015 senior lien revenue bond anticipation notes on Wednesday. The BANs are rated A2 by Moody's and A by S&P and Fitch.
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Weekly Volume Rebounds to $9.15B
Friday, May 1, 2015
By Aaron Weitzman
Municipal bond volume is expected to rebound to more than $9 billion in the coming week, as issuers take advantage of post-tax season demand.
Weekly volume is estimated at $9.15 billion, according to Ipreo and The Bond Buyer, up from the $4.99 billion sold week of April 27, according to Thomson Reuters. The total coming to market is comprised of $6 billion of negotiated deals and $3.15 billion of competitive sales.
"Savvy issuers and underwriters know that significant amounts of cash hit individual portfolios on May 1," said Michael Pietronico, chief executive officer at Miller Tabak Asset Management. "This creates more demand, all things equal."
The past week's drop off may be a harbinger of weeks ahead, he said, as the market responds to the likelihood that the Federal Reserve will start raising interest rates later this year.
"The drop off had something to do with interest rates: they have been moving higher, which is putting refunding deals back on the shelf," Pietronico said. "As summer is approaching it might become the norm as we get close to a liftoff of rising rates."
Leading off next week's calendar is a $348 million negotiated deal from the Indiana Finance Authority. Goldman, Sachs is expected to price the stadium project and convention center expansion project bonds on Thursday. The issue is rated Aa2 by Moody's and AA-plus by Standard & Poor's and Fitch Ratings. This bond sale is associated with Lucas Oil Stadium and the Indiana Convention Center project.
Goldman is expected to price the Los Angeles Community College District's $310 million of GOs on Wednesday after a retail order period on Tuesday. The bonds are rated Aa1 by Moody's and AA-plus by S&P.
Goldman is also slated to price the Florida Mid-Bay Bridge Authority's $279 million of tax-exempt and taxable first senior lien revenue bonds and tax-exempt second senior lien revenue bonds on Tuesday. The first senior lien bonds are rated BBB-plus by Moody's and S&P and the second senior lien bonds are rated BBB by Moody's and S&P.
Bank of America Merrill Lynch is scheduled to price Lee Memorial Health System's $277.065 million of hospital revenue and refunding bonds, Series 2015A on Wednesday. The bonds are rated A2 by Moody's and A by S&P.
Loop Capital markets is expected to price New York's Triborough Bridge and Tunnel Authority's $250 million Series 2015A general revenue bonds for MTA bridges and tunnels on Thursday after a retail order period on Wednesday. The deal is expected to mature serially from 2015-2035 and have term bonds in 2040 and 2045.
The proceeds of this sale will be used for "existing, approved capital projects and $100 million of the proceeds to pay off the 2014 bond anticipation notes" according to a spokesperson for the MTA. The bonds are rated Aa3 by Moody's, AA-minus by S&P and Fitch and AA by Kroll Bond Rating Agency.
Citigroup is scheduled to price on Thursday the Atlanta Development Authority's $200 million of senior lien and second lien tax-exempt and taxable bonds for the new downtown Atlanta stadium project. The senior bonds are rated Aa3 by Moody's and A-plus by S&P while the second lien bonds are rated A1 by Moody's and A by S&P.
Turning to the competitive arena, the state of Ohio is selling three separate issues totaling $345 million on Tuesday. The issues consist of $300 million of Series 2015B common schools GOs, $35 million of Series T natural resources GOs, and $10 million of Series 2015B taxable higher education GOs. All three issues are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
The state of Louisiana is scheduled to sell $334.990 million of Series 2015A and 2015B various purpose GO refunding bonds on Wednesday. The issue is rated Aa2 by Moody's and AA by S&P and Fitch.
The state of Louisiana has been facing some financial pressures and that the LSU deal that was aborted last week, was attributed to the state's woes.
Louisiana State Treasurer John Kennedy said he was told that some national investors had pulled out of a large part of the transaction because of concern over the state's support colleges and universities.
"I think with Louisiana it is a self-inflected wound, and that all Louisiana paper will suffer until there is clarification there," Pietronico said.
The Los Angeles Unified School District is slated to sell $329.565 million of Series 2015A GO refunding bonds on Wednesday.
Like Louisiana, the LAUSD are also dealing with some issues going into their pending bond sale. LAUSD officials have been upfront about their plans to use bond proceeds to buy iPad tablets for students and they have been in talks with the SEC about it.
"There is excess supply with California paper right now so with timing of the issue, it might cost some extra yield, as the California market seems extra heavy and the issuer is in a lot of portfolios," Pietronico said.
Seattle is set to offer two separate issues totaling $323.21 million on Wednesday. The sales consist of $156.875 million of Series 2015 unlimited tax GO improvement bonds and $166.335 million of Series 2015A limited tax GO improvement and refunding bonds. Both sales are rated Aa1 by Moody's, triple-A by S&P and AA-plus by Fitch.
On Tuesday, the Massachusetts School Building Authority will sell $300 million of Series 2015 senior dedicated sales tax bonds. The issue is rated Aa2 by Moody's.
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Rare Hawaii Paper Leads $8.2B Weekly Calendar
Friday, March 13, 2015
By Aaron Weitzman
Municipal volume is expected to exceed $8 billion for a 10th straight week, led by a rare issue from Honolulu.
Volume for the March 16 week is estimated at $8.2 billion, according to Ipreo and The Bond Buyer, including $6.9 billion of negotiated deals and $1.3 billion of competitive sales.
The city and county of Honolulu, Hawaii's $879 million of Series A-D tax-exempt and Series E taxable general obligation bonds, is scheduled to be priced on Tuesday by Bank of America Merrill Lynch.
"Given the scarcity of paper in Hawaii generally speaking, it will do very well," said Michael Pietronico, chief executive officer at Miller Tabak Asset Management. "It also helps that the credit is respected and it is a liquid credit."
Hawaii ranked 39th among states in muni issuance last year, with $1.56 billion in nine sales. The last time Honolulu GO's came to market was in October 2012, when it sold $912.48 million, also through BofAML.
Citigroup Global Markets is expected to price the North Carolina Medical Care Commission's $376 million of bonds for Vidant Health on Monday. The issue is expected to be structured as serials from 2016-35 with a 2039 term bond. The deal is rated A1 by Moody's Investors Service and A-plus by Standard and Poor's.
"This sector has performed well, assuming its priced attractively, I think there will be a lot of buyers in the higher yield side of the market but not so much with retail investors," Pietronico said.
Citi is also scheduled to price the state of Oregon's $296 million of GOs, under Article XI for state projects on Tuesday, following a retail order period Monday. The deal is rated Aa1 by Moody's and AA-plus by both S&P and Fitch Ratings.
"The state tax rate is high enough in Oregon and the supply of paper is low enough. It is a scarce name that we don't see it often and I believe there will be significant demand for it in the market," Pietronico said.
Oregon had planned to come to market on March 5, but with university borrowings in the sale, there were grant agreements and other provisions that had to be worked out. Since then, the yield on the AAA benchmark scale has gone up five basis points to 2.14% from close on March 12, to 2.09% from close on March 5.
"Interest rates have deteriorated a bit. The original size of the deal was in the $450 million range, but now our refundings have taken a hit a little bit," said Laura Lockwood-McCall, director, debt management division for Oregon state treasury. "The [present value] savings have shrunk, but that's the way the cookie crumbles sometimes."
Lockwood-McCall also said that this deal will be the largest chunk of new money that the state will do this year. "We will still achieve robust savings with this deal, and our future looks bright as the state economy is continuing to strengthen," she said.
Goldman Sachs is set to price the Illinois Finance Authority's $283 million of Series 2015C revenue refunding bonds for the Silver Cross Hospital and Medical Center on Tuesday. The deal is rated Baa1 by Moody's and BBB-plus by Fitch.
Wells Fargo Securities will be pricing the board of regents for Texas Tech University's $246.88 million of revenue refunding and improvement bonds on Tuesday. The deal is rated Aa1 by Moody's, AA by S&P and AA-plus by Fitch. The pricing is expected to have both serials and terms.
JPMorgan is expected to price the San Mateo County Transit District's (Caltrain) $242.48 million of limited tax bonds on Wednesday, following a retail order period on Tuesday. Series A will consist of $202.485 million of non-taxable and Series B will be $39.995 million of taxable bonds. The deal is expected to mature serially from 2019 to 2034. It is rated AAA by S&P and AA-plus by Fitch.
Some other sizeable deals that will be coming to market are: Albuquerque Bernalillo county water utility authority's $232.175 million of bonds. JP Morgan is expected to price the deal on Wednesday, which is scheduled to mature serially from 2017 to 2034. The deal is rated Aa2 by Moody's, AA-plus by S&P and AA by Fitch; Morgan Stanley is expected to price Palomar community college district's $220 million of general obligation bonds on Tuesday. The deal is rated Aa2 by Moody's and AA-minus by S&P.
The largest competitive bond sale is slated for Wednesday - the Omaha Public School District No. 001, Neb.'s $141 million of Series 2015 GOs. The bonds, rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's, mature serially from 2024 to 2040. The school district last sold bonds competitively on July 11, 2001, when Merrill Lynch won $100 million of Series 2001B GOs with a true interest cost of 5.0372%.
The school district of Palm Beach county, Fla., is tentatively scheduled as it is on the day to day calendar. If the deal does come to market next week, JP Morgan will price the $224.515 million of Series 2015D, which are expected to mature serially from 2015 to 2032. The deal is rated Aa3 by Moody's and AA-minus by S&P.
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