An uptick in negotiated offerings will do little to alleviate the drought in the long-term primary arena this week, as just over $3 billion is expected to arrive. Most attention will focus on a single $2.8 billion financing in the short-term market.
California will sell the multi-billion-dollar revenue anticipation note deal in the competitive market on Wednesday, the largest deal on that calendar, followed by a $200 million New York City Municipal Water Finance Authority revenue sale structured as serial bonds and slated for the same day.
The negotiated calendar is showing a glimmer of improvement with an estimated of $2.48 billion coming to market, according to Ipreo LLC and The Bond Buyer. That's up from a revised $1.12 billion as reported last week by Thomson Reuters. Competitive sales are expected to total $628.1 million, up from Thomson's revised $637 million last week.
Overall volume is reported to grow to $3.11 billion, according to Ipreo LLC and The Bond Buyer, from last week's revised $1.75 billion.
California's RAN deal is the state's smallest cash flow borrowing transaction in eight years, and reflects the state's improved budget and liquidity. Last year, the state sold $5.5 billion of RANs in August at its lowest rates in more than four decades.
The RANs are rated MIG1 by Moody's Investors Service, SP1-plus by Standard & Poor's, and F1 by Fitch Ratings.
In the long-term market, a $372.73 million second lien water revenue offering is on tap from Chicago. The negotiated deal is being senior managed and priced by PNC Capital Markets LLC on Wednesday. The offering, which is structured to mature serially from 2015 to 2044, is rated A3 by Moody's, AA-minus by Standard & Poor's, and AA by Fitch.
The Pennsylvania Turnpike Commission will bring $286.43 million of special obligation taxable securities to market on Wednesday in a pricing led by Wells Fargo Securities. Structured to mature serially from 2014 to 2027 and the bonds are rated Aaa by Moody's.
Meanwhile, the $274 million Minnesota-St. Paul Airports Commission revenue offering will be priced by Citigroup Global Markets on Wednesday with a serial structure and single A rating from both Standard & Poor's and Fitch.
The two-pronged deal will consist of $221 million of bonds not subject to the alternative minimum tax structure to mature from 2016 to 2035, as well as $47 million of AMT-subject bonds that are structured to mature from 2016 to 2026.
Municipal analysts and managers expect new issuance to pick up before year end, easing the dearth of volume that has been problematic for much of 2014.
"There is no new issuance to sink your teeth into, and at these low rates it's hard to get people excited," a New York trader said last week.
"Seasonally, we do often see an uptick in new-issue supply before year end, but we will have to see if that happens and it is large enough to have an impact," said Tom Dalpiaz, managing director and portfolio manager at Granite Springs Asset Management. "Whatever supply we do get will probably be absorbed fairly well," he said. "You have a pretty fair amount of money looking for a home, new issue supply is well off previous years, so that all translates into pretty decent demand.
"The issuers at some point have to begin to do some new-money deals," Dalpiaz said.
