NEW YORK May 2 U.S. municipal bond sales will
total an estimated $4 billion next week, down from a revised
estimated $5.8 billion this week, as demand continues to
outstrip supply in the paper-starved tax-exempt market.
Negotiated sales are expected to total more than $3 billion,
with just $820 million of competitive offerings, according to
Thomson Reuters estimates on Friday.
Supply for the month of April was low at $23 billion
altogether, 18 percent below 36 billion sold in April 2013.
Because a majority of candidates for refundings are callable in
the summer, a slight uptick in refunding bond issuance could
come in the next few months, analysts at Morgan Stanley Research
said on Friday.
Meanwhile, investor demand in April was positive, with fund
flows totaling $484 million for the month, they said. But with
expected rate increases and lower returns on the horizon, it is
not clear whether the supportive liquidity environment that muni
bonds have been enjoying will continue, Morgan Stanley said.
While muni supply usually falls briefly after the end of the
first quarter, the month of April saw a sharp 18 percent
month-over-month decline, or more than double the average
decline of 7.6 percent for that period, said RBC Capital
Markets' Chris Mauro on Friday.
Next week's calendar is marked by a lack of deals even
approaching the $1 billion range. The biggest deal is a $450
million sale of Illinois State Toll Highway Authority senior
revenue bonds, to be offered in serial maturities from 2026
Proceeds will be used in conjunction with the authority's
15-year, $12.1 billion capital improvement plan, which was
approved in August 2011, according to the preliminary official
Citigroup Global Markets is the senior manager on the
negotiated deal, which is expected to price on Wednesday.
About 85 percent of the authority's labor force is
unionized. Most are operating under current contracts, but one
group of 569 toll collectors, warehouse workers and other
employees is currently in contract negotiations after their
previous one expired at the end of 2012.
About 240 white collar employees are also currently working
without a contract.
The authority's payments into the state's poorly-funded
pension system are also on the rise. Its 2014 contribution is
$44.5 million, up from $30.3 million in 2010, according to the
(Reporting by Hilary Russ; editing by Andrew Hay)