Morgan Stanley is scheduled to price $675 million of New York City Transitional Finance Authority tax-exempt fixed-rate revenue bonds for institutions on Wednesday.
Spreads were wider than usual during its two-day retail order period.
"The demand will be very strong," a New York trader said. "New York is a high tech state and the city is doing well as far as what's securing the debt. The expectation is that there will be a lot demand if you're looking for a safe investment. It's not attractive from a yield point of view."
The TFA will also auction $125 million of taxable revenue bonds in the competitive market on Wednesday. Market participants anticipate both deals will be well-received since they offer a lot of spread over other high-grade names.
"Demand will be there as well for the taxable portion," the New York trader said. "I don't think there will be a difference in bids."
The deals are rated Aa1 by Moody's Investors Service and AAA by both Standard & Poor's and Fitch ratings.
The TFA plans to price $200 million of tax-exempt variable-rate demand bonds on Thursday July 31st, with the intention of bringing a total of $1 billion of bonds to the municipal market by the end of July, according to a press release.
"Recently several high-grade issuers have considered increasing their variable-rate exposure," Kevin Dunphy, head of public finance at MUFG said. "NYC has long benefitted from the use of variable rate debt as a prudent portion of their overall debt structure. Given the reduction in bank liquidity fees and resets below 5 basis points, VRDBs are an attractive option."
Other deals scheduled to enter the market on Wednesday include $117.3 million of California Health Facilities Financing Authority revenue bonds. Bank of America is the lead underwriter. The deal is rated Aa3 by Moody's, AA-minus by S&P and AA by Fitch.
"The Cal health facilities deal will be strong," the New York trader said. "Hospital states are in demand for yield."
Goldman Sachs will issue $216.3 million Oregon Department of Administrative Services Lottery revenue bonds in three parts. The deal is rated Aa2 by Moody's and AAA by S&P.
Traders said there are a couple of community college deals this week that are of interest.
Morgan Stanley will bring $104 million of Foothill-De Anza Community College District general obligation bonds. The deal is rated Aaa by Moody's.
Wells Fargo Advisors will issue $100 million of Laredo Community College, Texas, general obligation bonds. The deal is rated Aa3 by Moody's, and AA-minus by both S&P and Fitch.
"Community college districts have more flexibility on the expense side in the case of student demand or prioritizing different classes," the New York trader said. "There's not much of a ten-year issue with community colleges. I'm not sure how they will price, but it's a sector we're interested in."
