A $495 million competitive sale of Arkansas general obligation bonds will lead primary market activity this week in the municipal bond market as long-term volume increases after last weeks holiday lull.
The GO is part of $5.86 billion in long-term muni-bond issuance headed to market this week, as estimated by Ipreo LLC and The Bond Buyer. Last week, Thomson Reuters reported that issuers trimmed sales to a revised $1.43 billion for the past week, which was shortened by the Labor Day and Rosh Hashanah holidays.
The Arkansas highway construction deal will be offered on Tuesday with serial bonds from 2014 to 2023 and is rated Aa1 by Moodys Investors Service and AA by Standard & Poors.
The deals arrive after municipals posted slight gains on Friday, following Treasury prices higher on news that the Bureau of Labor Statistics August employment report showed payrolls were up 169,000, less than forecast, and the June and July figure was cut to 74,000.
Managers didnt read too much into the gains on Friday, but said the market is moving in the right direction. The municipal market has to show that a solid bottom in prices is in place before any meaningful rally can occur, said Michael Pietronico, chief executive officer at Miller Tabak Asset Management.
The gains marked a reversal after Municipal Market Data reported 10-year and 30-year yields ended at 3.04% and 4.51% on Thursday, two basis points higher than where they began last Tuesday, amid concerns over illiquidity and heavy mutual funds redemptions.
Todays bond-friendly data on the employment picture in the United States may slow the pace of redemptions from mutual funds as investors conclude that any Fed tapering is already priced in, Pietronico said Friday, referring to expectations that the Federal Reserve may begin to reduce its bond purchasing program.
Elsewhere in the competitive market, a $485 million sale of state personal income tax bonds will be offered by the New York State Urban Development Corp. on Tuesday with serialsfrom 2015 to 2024.
In the negotiated market, a $384.6 million Miami-Dade County, Fla., deal will be priced by Raymond James & Associates Inc. on Tuesday, following a retail order period on Monday. The four-pronged deal is rated A3 by Moodys and A by Fitch Ratings, and contains two series that are subject to the alternative minimum tax.
AA $286.88 million sale of lease revenue bonds from the Alameda County, Calif., Joint Powers Authority is also pricing this week. Rated Aa3 by Moodys and AA by Fitch, the bonds will be priced by JPMorgan Securities LLC on Thursday and structured as serial bonds maturing from 2018 to 2035.
The Texas Private Activity Bond Surface Transportation Corporation will issue $277 million of senior lien revenue bonds on Thursday when JPMorgan prices the 2038 and 2043 term bonds that are rated Baa3 by Moodys and BBB-minus by Standard & Poors.
The Monroe County Industrial Development Corporation will sell $265 million of revenue bonds for the University of Rochester when JPMorgan prices it on Tuesday, after a retail order period on Monday. The deal is rated Aa3 by Moodys and AA-minus by the two other major rating agencies and matures serially from 2014 to 2033 with term bonds in 2038 and 2043. Series C is taxable and matures from 2014 to 2028 with a term bond in 2033.
A $580 million taxable fixed-rate note sale from the Providence Health & Services Obligated Group will dominate the short-term arena when Bank of America Merrill Lynch prices it on Thursday with Aa2 ratings from Moodys and AA from Standard & Poors and Fitch Ratings.