SAN FRANCISCO, March 17 (Reuters) - Louisiana, which received a credit downgrade this week, will sell $189 million in general obligation bonds next week in another light issuance week for the U.S. municipal market.
A total of $4.5 billion in U.S. municipal bond and note sales will be offered next week, due to the approaching tax deadline and this week’s Federal Reserve rate hike, according to Municipal Market Data, a Thomson Reuters unit.
The Fed on Wednesday raised the target overnight interest rate by 25 basis points to a range of 0.75 percent to 1.00 percent, a move spurred by steady economic growth.
The rate hike, the second in three months, was expected and essentially fully priced in prior to the meeting, according to a report by Barclays on Friday.
Investors expect the next hike will not happen until later summer or early fall of this year, Barclays’ analysts said.
Also on Wednesday, credit ratings agency S&P Global lowered its long-term rating to AA- from AA on Louisiana’s general obligation bonds outstanding due to weak revenue collections from both individuals and businesses from a prolonged contraction in the oil and gas industry.
“Without meaningful, long-term structural tax changes that could carry significant implementation risk, there is a one-in-three chance we could lower the ratings,” S&P Global said.
“We could revise the outlook to stable if the legislature takes meaningful measures to align revenue expectations with recurring expenditures to support future budgetary performance and fiscal stability while rebuilding reserves to a level we consider good,” it said. (Reporting by Rory Carroll; Editing by James Dalgleish)