Congressional uncertainty aside, Tuesday's Hawaii highway revenue bond deal is likely to place well thanks to a light calendar and inflows into the municipal market, a trader in Virginia said.
The $139.38 million highway bonds will be sold in the negotiated market by Robert W. Baird, according to data provided by TM3. The deal is rated AA by Fitch, AA-plus by Standard and Poor's, and Aa2 by Moody's Investors Service.
The bond's will benefit from timing, after municipal funds reported their highest inflows in months and the primary market calendar contracted to $4.2 billion.
"I imagine [the Hawaii deal] will do pretty well," said the same Virginia-based trader. "With fund flows positive, high grader buyers will be here in full force."
Municipal funds reported their highest inflows in 11 weeks for the week ending July 23, suggesting demand may outpace supply this week. Funds that report weekly said inflows surged fourfold to $686.2 million, from $157.8 million the week before, the highest since the week ending May 7, when they totaled $943.2 million, according to Lipper FMI.
However, the deal may receive some uncertainty from investors concerned about the federal transportation budget, currently bouncing back and forth between the House and the Senate, said the Virginia trader.
"Congress hasn't passed a true transportation bill in something like half a decade," said the Virginia trader. "What they've done are these patchwork bills to provide funding to state for road repair."
One of these "patchwork" bills is set to expire soon, said the Virginia trader. Without a consensus on a new bill, the funding will dry up, putting pressure on highway authority revenues, and particularly the debt service associated with them.
There are no long-term competitive deals over $50 million scheduled to price Tuesday, according to TM3.
