April 25 U.S. municipal bond sales will drop to
$5 billion next week, down from around $8 billion this week,
according to Thomson Reuters estimates on Friday.
This week's issuance was unusually high and the drop still
sets next week up to beat this year's weekly average of
approximately $4.5 billion. This year has seen lower issuance
levels, a factor that has helped the market recover some of its
losses from last year when average weekly issuance was around $5
Pennsylvania was set to issue nearly $835 million in general
obligation debt. Moody's assigned a relatively weak Aa2 rating
to the bonds, citing the state's below average financial
position and its growing and substantial unfunded pension
liability. Fitch assigned a AA rating with a negative outlook.
Pennsylvania's financial position remains below average,
Moody's concluded, due in significant part to the expectation
that its unfunded pension liability and moderate growth will
continue to leave it struggling to balance its budget.
The state pays one of the highest premiums to borrow on the
nearly $4 trillion municipal bond market, with investors asking
a quarter of a percentage point over the yield on top-rated muni
bonds to lend to the state.
The state is slated to sell $289.5 million of refunding
general obligation bonds and $545 million first series GO bonds
on or about April 29, through competitive bid.
Fitch said its AA rating reflected the state's "significant
financial challenges", including its failure to adequately fund
its public pensions and the lack of a healthy reserve fund.
Another large deal is a combined $565 million sale of highly
rated Stanford University bonds by the California Educational
Facilities Authority. The sale includes $290 million of
tax-exempt revenue bonds and $150 million of taxable bonds.
The Michigan Finance Authority will issue $440 million of
hospital refunding bonds for the state's City of Royal Oak
Hospital, led by Morgan Stanley.
Next week's competitive calendar totals about $2.9 billion,
with the negotiated sales estimate $2.2 billion.
(Reporting by Edward Krudy; Editing by Diane Craft)