April 4 (Reuters) - U.S. municipal bond sales will rise slightly next week to $5.4 billion, up from a revised $4.5 billion this week, according to Thomson Reuters estimates on Friday.
The largest deal will be a $760 million debt sale of highly rated future tax secured subordinate bonds by the New York City Transitional Finance Authority. Bank of America Merrill Lynch will offer $650 million of tax-exempt bonds to retail investors on Friday and Monday ahead of formal pricing on Tuesday. Those bonds are structured with serial maturities from 2016 to 2041, according to the preliminary official statement.
Another $110 million of taxable bonds, carrying maturities from 2018 through 2026, will be sold competitively on Tuesday.
Illinois will be back in the market on Thursday with $250 million of general obligation bonds, the week’s biggest competitive offering.
It’s the state’s first debt sale in the wake of Illinois Governor Pat Quinn’s March 26 budget address in which he proposed making permanent a once-temporary state income tax hike. Illinois, which sold $1 billion of GO bonds in February and $402 million of sales tax revenue bonds in March, has the lowest GO credit ratings among the states.
Illinois debt is on the “no-buy list” at Sage Advisory Services in Austin, Texas, according to its CIO and president Robert Smith.
“We don’t like betting on a political process as a fiduciary,” he said, citing uncertainty over the fate of tax proposals in Quinn’s budget. “Right now the fundamentals are a little bit suspect.”
Next week’s negotiated calendar totals an estimated $3.9 billion next week, with competitive sales to total about $1.5 billion.
The second-largest negotiated sale comes from Washington state. Energy Northwest, owner and operator of the Columbia Generating Station, a nuclear electric generating station, will sell $646.5 million of revenue bonds through J.P. Morgan. The deal consists of nearly $530 million of new bonds, $26 million or refunding bonds and $90.7 million of taxable bonds.
The bonds are rated Aa1 by Moody’s Investors Service, AA by Fitch and AA-minus by Standard & Poor‘s.
The bonds are supported by a net billing agreement with Bonneville Power Administration, which sells power through long-term contracts through 2028, according to the rating agencies. (Reporting by Robin Respaut and Hilary Russ; Editing by James Dalgleish)