FRI­DAY’S YIELDS

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

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. ◽

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