Muni Minute

While volume will be under $4 billion, strong demand should continue as the muni market is sound technically and investors are flush with cash. Investors are feeling bullish.

Coming off the primary market's most robust week of issuance this year, investors will see more than $6 billion hit the calendars this week – with almost a third of that issuance coming from one well-known California issuer.

This week the municipal bond market is getting what it wants — and what it needs — more supply. Almost $10 billion of new deals are on tap in a calendar that will have something for almost everybody.

While low volume is frustrating for investors, scarcity is driving demand as buyers have realized they cannot wait for something that will not come. Although this week lacks a large deal, it is full of medium sized deals from a variety of issuers.

The Federal Open Market Committee meets this week, which means a light primary market calendar of $4.3 billion. With year-over-year core PCE seen at or near 2%, its statement will acknowledge rising inflation.

A $1.4 billion sale from New York Transportation Development Corp., for Delta’s redevelopment at LaGuardia Airport is the bellwether deal of a near $8 billion week of new issuance. This will mark the first time in six years that Delta has issued in the tax exempt market and will be the second largest airline special facility bond ever completed in the municipal market.

The 2017 top municipal bond issuer is bringing yet another two-billion dollar deal to market, this time around however California will be selling taxable bonds. The new tax legislation leaves the Golden State few options to refinance the 2009 bonds, but the taxable route should have the way for buyers overseas.

Clark County, Nev.’s $648 million Las Vegas stadium bond deal for the NFL’s Raiders is the first since Congress toyed with the idea last year of eliminating the tax-exemption for sports facilities.

The Tobacco Settlement Corp. is coming to market with over $3 billion of municipal bonds in a refunding deal that takes out all of the securities issued back in 2007.

The Constitution State is bringing the largest negotiated deal to a supply starved market this week — although the state is faced with fiscal challenges, it hopes the big sale satisfies investors, during a time when munis are attractive but supply is scarce.