Traders expect the market to "firm up" as this week's primary calendar begins to get rolling on Tuesday.
A handful of attractive deals will hit the market Tuesday, ahead of the largest issuances of the week, which are slated to price on Wednesday and Thursday. As buyers evaluate the new deals, participants expected that the market probably firm up from Monday's sluggish and flat environment.
"As more deals come to market, more focus will be pointed at munis, which is usually only good, especially in today's strong technically driven market," said an Atlanta-based trader.
JPMorgan will bring a $166.1 million Idaho Health Facilities Authority revenue bond deal on Tuesday rated A3 by Moody's Investors Service and A-minus by Standard & Poor's. The healthcare sector has experienced one of the largest declines in issuance volume so far in 2014, down 35% through June 31, according to data provided by the Bond Buyer. That drought will make the debt especially enticing to the market, the Midwest trader said.
One New York trader noted that the obligor, Saint Luke's Healthcare System was recently downgraded and its liquidity was limited.
In the competitive markets, Minnesota will auction a four-part deal totaling $904 million of general obligation bonds on Tuesday as well.
"It's a strong credit," the New York trader said. "We'll buy it, but frankly it's usually not that attractive. It's good for the state. There's no opportunity for additional yield."
The bonds will mature from 2015 to 2034. The deal is rated Aa1 by Moody's and AA-plus by both S&P and Fitch Ratings.
Alabama University Board of Trustees will sell a two-part deal totaling $243.9 million of revenue bonds on Tuesday.
"Any time there is a flagship school deal usually it's a pretty secure issue," the New York trader said. "Not sure how exciting the yields will be."
The bonds mature from 2015 to 2021 and are rated Aa2 by Moody's and AA-minus by S&P.
Issuance will increase 24% this week to $6.67 billion from $5.37 billion that Thomson Reuters reported came to market last week. Nearly $2 billion of the new paper will come from the New York City and Port Authority of New York and New Jersey deals, where appetite is expected to be "ferocious."
New York City's $900 million general obligation deal will open to institutional on Wednesday following a retail order period on Monday and Tuesday. Bank of America is the lead underwriter and the deal is rated Aa2 by Moody's and AA by both Standard & Poor's and Fitch.
On Thursday, Citigroup Global Market will bring a two-fold deal totaling $833.8 million of Port Authority revenue bonds. The bonds mature from 2015 to 2034.
