May 23 Airport bonds lead the $4.3 billion of U.S. municipal bond sales next week, a slight slump as the market closes for the Memorial Day holiday on Monday, according to Thomson Reuters estimates.
The city of Chicago and Metropolitan Washington Airports Authority in D.C. will issue $784 million and $542 million in airport revenue and refunding bonds. This week, for the first time in two months, Metropolitan Washington Airports Authority bonds outpaced Puerto Rico-related bonds for most actively traded, according to Barclays.
The Metropolitan Washington Airports Authority issued approximately $422 million earlier this month to help construct a 23-mile rail linking the Metrorail to Dulles International Airport, among other capital improvement projects, through toll revenue. That issue, called Dulles Toll Road Second Senior Lien Revenue Refunding Bonds, Series 2014A, was rated Baa1 from Moody's and BBB-plus from S&P.
Next week's Metropolitan Washington Airports Authority revenue and refunding bonds are rated A1 from Moody's and AA-minus from Fitch. The bonds will largely refund existing bonds with lower interest rates.
That's also the motive behind next week's biggest sale. Chicago will issue $784 million of revenue and refunding bonds for Midway Airport. Moody's assigned an A3 to the bonds, noting that the airport has enjoyed strong growth by Southwest Airlines.
"Lower interest rates can help with financing costs. This is something we see across the industry," said Seth Lehman, a senior director at Fitch Ratings. "Rates have rallied, the yield has come down, so certainly more savings can be gained."
The airport bonds are two of the largest on the negotiated calendar, which totals $3.85 billion next week, compared to $427 million on the competitive calendar.
(Reporting By Robin Respaut; editing by Andrew Hay)