Municipals close mixed ahead of new $9.3 billion calendar; Chicago BOE reschedules bond sale

By Sheri Kasprzak

New York, April 20 – Municipals rounded out another session mixed as the market awaits a $9.3 billion new-issue calendar, traders reported.

Long bonds were weaker by 1 basis point to 2 bps, said a trader in the afternoon, while short and intermediate maturities were flat or slightly firmer.

The coming week will offer about $9.3 billion of new offerings, headlined by a $1,101,555,000 G.O. bond offering from the State of California.

Energy Northwest of Washington State is also on the big board with an $887.85 million electric system bond sale on Wednesday.

Chicago BOE reschedules deal

Among the more interesting offerings, the Chicago Board of Education is set to price $372.22 million of dedicated alternate revenue unlimited tax G.O.s (/A-/).

The offering had been slated to price in late March, but it was postponed in the wake of Chicago’s mayoral runoff election. After incumbent Rahm Emanuel won the runoff, the deal was put back on the calendar. This time, the four-tranche offering is set to price on Tuesday.

The deal includes $175,675,000 of series 2015C project bonds, $100 million of series 2015D mandatory put project bonds, $20 million of series 2015E green project bonds and $76,545,000 of series 2015F refunding bonds.

The bonds will be sold through PNC Capital Markets LLC and BMO Capital Markets.

Proceeds will finance capital projects and refund the board’s series 2013B-C G.O. bonds.

Variable-rate bonds sold

The board hit the market in late March with $178.1 million of series 2015 Sifma index bonds.

That deal included $89.2 million of series 2015A bonds and $88.9 million of series 2015G bonds.

Both bonds (/A-/BBB-) are due March 1, 2032 and bear interest at the Sifma rate plus 400 bps.

Illinois, New Jersey actions

Elsewhere, Illinois and New Jersey are taking some steps that may actually prove negative for bondholders and might lead to bankruptcy for some government entities, said Fitch analysts Amy Laskey and Rob Rowan in a note.

The analysts specifically pointed to Illinois governor Bruce Rauner’s proposal to grant local governments the authority to file a Chapter 9 petition and New Jersey’s recent appointment of corporate restructuring experts to help Atlantic City handle its current fiscal crisis.

“We believe efforts to resolve looming budget deficits and ensure the affordability of long-term obligations would be more productive than focusing on easing laws or practices to allow bankruptcy,” Laskey and Rowan said in Monday’s report.

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