Lots of muni supply in a short week as market to see $7.6B bonds, $1B+ notes

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Lots of muni supply in a short week as market to see $7.6B bonds, $1B+ notes
By

Chip Barnett Aaron Weitzman Christine Albano

Published

August 30 2019, 3:20pm EDT

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Primary bond market Secondary bond market Municipal bond funds State of California State of New York Metropolitan Transportation Authority Board of Education of the City of Chicago State of North Carolina State of Texas Commonwealth of Massachusetts

For a normally dead holiday-shortened week, there sure is a lot of municipal supply on tap. Muni market participants will see a hefty bond slate complemented by a $1 billion note sale in the competitive sector.

Primary market
IHS Markit Ipreo forecasts weekly bond volume will rise to $7.6 billion from a revised total of $6.8 billion in the prior week, according to updated data from Refinitiv. The calendar is composed of $5.3 billion of negotiated deals and $2.3 billion of competitive sales.

Topping the slate is California’s (Aa3/AA-/AA) $2.3 billion general obligation deal consisting of $1.65 million of various purpose refunding GOs and $650 million of various purpose GOs coming to market on Thursday.

Jefferies, Stifel and Ramirez are lead managers. Co-manager include 280 Securities, Academy Securities, Barclays, BofA Securities, Blaylock Van, BNY Mellon Capital Markets, Cabrera Capital Markets, Caldwell Sutter Capital, Citigroup, D.A. Davidson, FTN Financial Capital Markets, George K. Baum, Goldman Sachs, JPMorgan Securities, Mesirow Financial, Mischler Financial Group, Morgan Stanley, Piper Jaffray, Raymond James, RBC Capital Markets, TD Securities, The Williams Capital Group, UBS, U.S. Bancorp Investments, and Wells Fargo Securities. PRAG is the financial advisor; Orrick is the bond counsel. As we reported last week, the state dropped IFS Securities as an underwriter on this deal after allegations of improprieties recently emerged about a principal whose off-book trades drained the firm’s capital and triggered regulatory and criminal probes.

In mid-August, Fitch Ratings upgraded the state's general obligation bonds to AA from AA-minus. Fitch said the upgrade "reflects the improved fiscal management that has become institutionalized across administrations, which in Fitch's view allows it to better withstand economic and revenue cyclicality." The outlook is stable.

After a successful sale of more than $1 billion of tax-exempt and taxable refunding bonds the previous week, Massachusetts (Aa1/AA/AA+) will return with a $600 million GO bond issue. Morgan Stanley is expected to price the Series G consolidated loan of 2019 GOs on Thursday.


Florida, New York and New Jersey, and California names were among the most actively quoted bonds in the week ended Aug. 30, according to IHS Markit.

On the bid side, the Capital Travel Agency, Florida, 4 revenue 5s of 2043 were quoted by 49 unique dealers. On the ask side, the Port Authority pof New York and New Jersey revenue 4s of 2037 were quoted by 146 dealers. Among two-sided quotes, the California taxable 7.55s of 2039 were quoted by 12 dealers.