April 11 U.S. municipal bond sales will slump to
$2.4 billion next week as the market closes for the Good Friday
holiday, the lowest level since early January and well down from
around $4.3 billion this week, according to Thomson Reuters
estimates on Friday.
Far fewer new bonds have come to market this year. That has
helped munis recover some of their losses from last year while
lifting the market to one its three best first-quarter returns
in the last two decades. Issuance was 26 percent to $60.3
billion in the first quarter.
Eric Friedland, head of municipal research at Schroders
Investment Management, said municipalities have cut back on new
issuance this year because of defered capital expenditure and
the unpopularity of issuing new debt. With interest rates poised
to increase, there is a lack of refunding, he said.
"Low volume has pretty much been the story for the entire
year," said Friedland. "In the past week, with new issues coming
to market, the orders have been over-subscribed."
Next week's competitive calendar totals about $1.3 billion,
with the negotiated sales estimated to total $1.1 billion. New
issuance will be the lowest since the week ended Jan. 11, when
$2.2 billion of new bonds were issued.
New Jersey Educational Facilities Authority (NJEFA) will
issue $197.5 million of revenue and refunding bonds, which are
secured by payments from the state. The proceeds will fund
capital improvements for public and private higher education
institutions and refund some outstanding bonds.
The deal comes after Standard & Poor's downgraded New Jersey
to A-plus from AA-minus this week, citing a structurally
unbalanced budget, partially funded pension obligations,
significant retiree healthcare obligations, and a lot of debt.
New Jersey joins Illinois and California as the only states
rated in the A category.
The tax-exempt sale, for which Raymond James & Associates,
Inc will serve as lead underwriter, was rated A-plus with a
negative outlook by Fitch Ratings.
In an unusual twist, the largest issue next week is a
competitive deal, a tax-exempt $321 million general obligation
refunding issue from North Carolina scheduled to price on
Wednesday. Those bonds are structured with maturities from 2015
to 2025, according to the preliminary official statement. All
three ratings agencies gave the bonds a triple-A rating.
The second-largest sale hails from the Massachusetts Bay
Transportation Authority (MBTA) on the negotiated calendar. The
authority will sell $200 million of tax-exempt senior sales tax
bonds through Barclays Capital. Proceeds will be used for
capital improvements, according to Moody's. Moody's assigned the
bonds an Aa2-rating with a stable outlook.
The bond market will be closed next Friday in observance of
the Good Friday holiday.
(Reporting by Robin Respaut and Edward Krudy; Editing by