The Bond Buyer 40

The Bond Buyer - - Front Page - By Chip Bar­nett & aaron Weitz­man

Vol­ume in the pri­mary mu­nic­i­pal bond mar­ket is ex­pected to de­cline to fewer than $4 bil­lion of bonds is­sued, a typ­i­cal slow­down fol­low­ing a hol­i­day week­end.

Ipreo es­ti­mates vol­ume will fall to $3.86 bil­lion from the re­vised to­tal of $7.02 bil­lion sold in the past week, ac­cord­ing to up­dated fig­ures from Thom­son Reuters. The cal­en­dar for the La­bor Day-short­ened week ahead is com­posed of $3.03 bil­lion of ne­go­ti­ated deals and $828 mil­lion in com­pet­i­tive sales.

There are only five sched­uled sales that are $100 mil­lion or greater in size, all com­ing from the ne­go­ti­ated arena.

“I don’t see the lack of par­tic­i­pants im­pact­ing per­for­mance be­cause sup­ply is on the low side,” said Jim Colby, se­nior mu­nic­i­pal strate­gist at VanEck. “De­mand has been strong and that should con­tinue, al­though with less bonds avail­able for grabs next week, I am sure not ev­ery­one will get as many as they want.”

Colby said that lower vol­ume is nor­mal in a hol­i­day-short­ened week and com­ing off rel­a­tively strong is­suance in Au­gust,

Septem­ber could go one of two ways.

“Once ev­ery­one is back, the first full week of

Septem­ber should be telling,” he said. “Is­suers are be­ing cau­tious but see­ing we’re at the ninth month of the year and get­ting close to quar­ter-end, that can some­times push bankers to get deals done. So we will have to see how that plays out.”

Mor­gan Stan­ley is ex­pected to price the week’s largest deal: the New Jer­sey Eco­nomic Devel­op­ment Au­thor­ity’s $595 mil­lion of mo­tor vehicle sur­charges sub­or­di­nate rev- enue and tax­able bonds. The deal is rated Baa2 by Moody’s In­vestors Ser­vice but some of the bonds are ex­pected to be in­sured by Build Amer­ica Mu­tual.

Bank of Amer­ica Mer­rill Lynch is sched­uled to price the City and County of Honolulu, Hawaii’s $350 mil­lion of rail tran­sit project and float­ing rate gen­eral obli­ga­tion bonds ex­pected on Tues­day. The deal is rated Aa1 by Moody’s and AA-plus by Fitch Rat­ings.

Goldman Sachs is on the docket to price the Re­gents of the Univer­sity of Texas’ $350 mil­lion of tax­able sys­tem rev­enue bonds on Thurs­day fol­low­ing in­di­ca­tions of in­ter­est on Wed­nes­day. The deal is rated triple-A by Moody’s, S&P Global Rat­ings, and Fitch, and it is an­tic­i­pated to come as a bul­let ma­tu­rity in 2047.

In the com­pet­i­tive arena, the Penn­syl­va­nia Higher Ed­u­ca­tional Fa­cil­i­ties Au­thor­ity is sched­uled to sell a to­tal of $128.79 mil­lion in three sep­a­rate sales on Wed­nes­day. The tax­able and tax-ex­empt state sys­tem of higher ed­u­ca­tion rev­enue re­fund­ing bonds are rated Aa3 by Moody’s and AA-mi­nus by Fitch.

Top-shelf mu­nic­i­pal bonds were weaker on Fri­day as the mar­ket wound up trad­ing on a quiet note ahead of the three-day hol­i­day week­end for La­bor Day.

The yield on the two-year Trea­sury was un­changed from 1.33% Thurs­day, the 10year Trea­sury yield gained to 2.14% from 2.13% and the yield on the 30-year Trea­sury bond in­creased to 2.75% from 2.73%.

In­vestors in mu­nic­i­pal bond funds con­tin­ued to put cash into the funds in the lat­est week, ac­cord­ing to Lip­per data. The weekly re­porters drew $344.518 mil­lion of in­flows in the week of Aug. 30, af­ter in­flows of $750.5 mil­lion the pre­vi­ous week.

Illi­nois and Ge­or­gia names were among the most ac­tively quoted bonds in the week ended Sept. 1, ac­cord­ing to Markit.

On the bid side, the Chicago Board of Ed­u­ca­tion tax­able 6.319s of 2029 were quoted by 67 unique deal­ers. On the ask side, the Metropoli­tan At­lanta Rapid Tran­sit Au­thor­ity rev­enue 3.25s of 2039 were quoted by 237 deal­ers. And among two-sided quotes, the Illi­nois tax­able 5.1s of 2033 were quoted by 27 unique deal­ers. ◽

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