NEW YORK, July 25 California State University will lead issuance in the $4 trillion municipal bond market next week with a deal to sell $744.3 million of revenue bonds.
Total issuance is slated to be $4.7 billion next week, including notes. The number is below this years weekly average of around $5.5 billion.
The CSU bonds are secured against various CSU revenue streams, including student housing fees, student union fees, parking fees and other student fees. Barclays Capital is the lead manager on the deal, which is scheduled for Monday.
The bonds are for financing and refinancing acquisition, construction, improvements and renovations at CSU facilities.
CSU does not currently insure its facilities against risk of loss due to earthquakes, according to the bond documents.
CSU warns investors that "damage to or destruction of one or more projects as a result of seismic or other events could result in a reduction in the gross revenues collected, and a major disaster could have a material adverse effect on the ability of CSU to collect sufficient gross revenue."
Around this time last year average weekly issuance was running at around $6.2 billion, according to Thomson Reuters data. The drop off has been attributed to less refinancing and a reluctance on the part of municipalities to take on more debt.
The lack of supply has helped support bond prices this year. The Barclays Capital Municipal Bond index has risen 6.2 percent since the start of the year. That has helped make back a decline of 2.6 percent last year.
The State of Hawaii is undertaking a $139.4 million bond sale on Tuesday. Robert W. Baird is the lead manager on the deal.
The bonds are backed by highway revenue from taxes, fees, and charges related to motor vehicle use on state highways. The debt is being issued to refinance outstanding debt issued to fund the state's capital improvement project.
About $3.7 billion of next week's issuance is made up of negotiated deals. About $941 million are competitive. (Reporting by Edward Krudy; Editing by Bernard Orr)