Issuance is expected to approach $9 billion in the coming week as February brings a $1 billion Pennsylvania competitive general obligation offering that was postponed because of the Jan. 26-27 blizzard in the Northeast.
The deal will lead off a calendar of new deals that is estimated to swell to $8.834 billion, according to Ipreo LLC and The Bond Buyer, from the past week's revised $4.108 billion as reported by Thomson Reuters.
"The appetite for municipal income and debt continues to be strong," given the ratio of municipal yields to Treasuries and since redemptions continue to be strong and net issuance continues to be close to zero, said Dave Manges, municipal trading manager at BNY Mellon Capital Markets in Pittsburgh.
"This slate of deals next week should get a good reception," he said on Friday, as the state of Pennsylvania prepped the GO sale for Tuesday with a structure of serial bonds maturing from 2016 to 2035 -- after it was rescheduled due to last week's snowstorm in the Northeast.
Proceeds from the sale, which is rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings, will be used to finance various capital facilities projects.
While municipal demand is strong, the Pennsylvania deal may be a tough sell, Manges said.
Although investors searching for value in terms of yield might be attracted to the new issue, the overall appeal for the GOs might be somewhat muted among conservative, quality conscious investors.
"Spreads have widened for the GO and the ratings are still under pressure," he said. "Until the state gets its budget and pension issues in order, a deal this large is likely to put pressure on the spreads."
Other large activity will include a $955 million composite sale from Trinity Health Credit Group, which is being priced by Bank of America Merrill Lynch LLC.
The deal, on behalf of the nation's second largest health care provider, will be priced through three conduit issuers: $641 million of new-money and refunding bonds will be issued through the Michigan Finance Authority; $170 million of revenue bonds will be issued through the Idaho Health Facilities Authority; and $152 million through Montgomery County, Md.
The deal is a mix of fixed- and variable-rate and taxable and tax-exempt bonds - with the tax-exempt piece set to price on Tuesday, following a retail order period on Monday, and the taxable portion pricing Thursday.
Moody's Investors Service last Wednesday downgraded the outstanding Trinity Health rating to Aa3 from Aa2, revising to outlook to stable at the lower rating from the previous negative. Fitch Ratings rates the bonds AA.
Besides Pennsylvania, Mississippi will bring a four-part sale of GOs totaling $701.6 million.
Series A totaling $157.23 million of GOs matures from 2026 to 2035 and is slated for pricing by Raymond James & Associates on Tuesday, while Series B totaling $129 million of taxable GOs will be priced by Bank of America Merrill on Tuesday.
Series C, the GO refunding bonds totaling $247 million, will be priced by JPMorgan Securities on Thursday with a structure maturing from 2018 to 2028, while Series D, the taxable GO refunding bonds, will be priced on Tuesday by RBC Capital Markets.
All the series are rated Aa2 by Moody's, AA by Standard & Poor's, and AA-plus by Fitch.
The Los Angeles Department of Airports, meanwhile, will navigate a three-pronged issue of senior revenue and subordinate revenue refunding bonds to market on Thursday with a structure of serial and term bonds.
The $499.40 million deal is being priced by Morgan Stanley & Co. and consists of $268.95 million of senior revenue bonds in Series A, $47.65 million of senior revenue bonds, and $182.79 million of subordinate refunding revenue bonds subject to the alternative minimum tax in Series C.
The senior bonds are rated Aa3 by Moody's and AA by the two other major rating agencies, while the subordinate bonds are rated A1 by Moody's, and AA-minus by Standard & Poor's and Fitch.
In the Southeast, the Virginia Public School Authority is gearing up for its competitive sale on Tuesday of $459 million of school financing refunding bonds which will be offered as serial bonds maturing from 2015 to 2037.
Rated Aa1 by Moody's and AA-plus by Standard & Poor's and Fitch, the bonds will refund certain bonds outstanding under the 1997 resolution for debt service savings. The state appropriation-backed bonds are further backed by Virginia's state aid intercept program.
