The municipal bond market is in line for Halloween treats in the last week of October as issuance is projected to rise.
Ipreo forecasts weekly bond volume will increase to at least $6.5 billion from a revised total of $5.7 billion in the prior week, according to updated data from Thomson Reuters. Ipreo’s estimates were calculated before the Chicago deal was approved for sale. The calendar is composed of $5.8 billion of negotiated deals and $703.3 million of competitive sales.
Chicago’s Sales Tax Securitization Corp.’s $1.31 billion deal headlines the new issue calendar. The Securitization Corp. was established last year to leverage city sales tax revenue to refund outstanding debt. Loop Capital Markets will be the lead manager on the deal, which is expected to price on Wednesday in the third sale since its inception.
The sale “should see strong demand,” said Alan Schankel, managing director and municipal strategist at Janney.
“Despite the recent S&P downgrade based on criteria change, the deal will attract yield hunters, since yields are likely to be
100 or more basis points over AAA benchmarks.”
The offering is comprised of $917.64 million of Series 2018C sales tax securitization bonds and $388.56 million of Series 2018D taxables sales tax securitization bonds and carries expected ratings of AA-minus by S&P Global Ratings and AAA by Fitch Ratings and Kroll Bond Rating Agency.
The corp. was authorized to refund outstanding sales tax and general obli- gation debt and the fund can go up to $3 billion. This upcoming third tranche, was original scheduled for $665 million but by upsizing it, they might not need the fourth tranche that has been planned for 2019.
There will also be a bevy of deals coming from California issuers next week as JPMorgan Securities gets set to price the Los Angeles Department of Airports’ $714 million of subordinate revenue bonds, Siebert Cisneros Shank & Co. gets ready to price Los Angeles’ $362 million of wastewater subordinate revenue bonds, Morgan Stanley gets set to price the San Mateo Community College District’s $318 million of general obligation bonds and Barclays Capital gets set to price the San Mateo County Joint Powers Financing Authority’s $260 million of lease revenue bonds.
Municipal bonds were stronger on Friday, according to a late read of the MBIS benchmark scale. Benchmark muni yields fell as much as one basis point in the oneto 30-year maturities. High-grade munis were stronger, with yields calculated on MBIS’ AAA scale falling as much as a basis point across the curve.
Munis were stronger on Municipal Market Data’s AAA benchmark scale, which showed the yield on both the 10-year muni general obligation and the yield on 30-year muni maturity falling two basis points. ◽