October 13, 2017 / 5:49 PM / 10 months ago

Ailing Illinois among heavier supply of U.S. muni deals next week

NEW YORK, Oct 13 (Reuters) - A heftier-than-average U.S. municipal bond supply is expected to hit the market next week, led by Illinois’ $1.5 billion offering of tax-exempt general obligation bonds, according to Thomson Reuters data.

The $1.5 billion bond offering - scheduled for competitive bidding in three $500 million series on Tuesday - is part of a bigger deal. Another $4.5 billion of Illinois GO bonds is to be priced in the following week.

The beleaguered state is borrowing to help pay down a nearly $16 billion pile of unpaid bills that stacked up during a two-year budget standoff that ended in July.

The spread for the state’s 10-year bonds was 168 basis points over top-rated municipal debt on Thursday, according to Municipal Market Data, a unit of Thomson Reuters.

Even without Illinois’ big deal, next week’s calendar is the largest in some time, with about $11.3 billion of bonds and notes expected to price.

The total tax-exempt muni supply is estimated at just above $9 billion, compared with a year-to-date weekly average of $6.5 billion, according to Thomson Reuters data. About half of the deals are competitive. Another massive offering includes nearly $1.6 billion in competitive bonds, tax-exempt and taxable, from the state of California.

Anchoring note sales is a $1 billion offering from New York state’s Metropolitan Transportation Authority. (Additional reporting by Karen Pierog in Chicago; editing by Hilary Russ and Jonathan Oatis)

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