The much anticipated arrival of Hurricane Sandy cast a shadow over the municipal bond calendar for the week.

At press time, many municipal bond issuers scheduled to price deals on Tuesday said they would go through with them. They added, however, that they would wait until Monday to consider whether weather conditions would affect scheduled pricings.

But the state of New Jersey said Friday afternoon that it would postpone temporarily a $2.6 billion competitive offering of tax and revenue anticipation notes due to the storm, a spokesperson for the state reported. The notes were scheduled to arrive Tuesday and lead all issues.

Regardless if Sandy arrives with her promised fury, no rainmaker deals were slated to reach the market this week. Thus, muni bond investors face another week of modest issuance. A deal for $400 million of Connecticut general obligation bonds is expected to top the list of long-term issues.

If Sandy fizzles or otherwise ignores the East Coast, then long-term muni bond volume is expected to total $5.88 billion this week, which is low for the season. Still, it's a few ticks higher than last week, which saw a reported $5.28 billion.

The supply-demand imbalance continues to aggravate investors. Although they need to put money to work and would like a flood of volume to help raise yields from their historically low levels, they'll most likely have to wait until after the U.S. elections.

Demand for municipals has been so strong that next week's volume should be well-received, said Tom Dalpiaz, a senior vice president and portfolio manager at Advisors Asset Management. In fact, he added, deals have been coming since the end of the summer in higher volume, but have been very well received.

"They've been coming at spreads that have been somewhat tighter," Dalpiaz said. "And then in many cases, they've been oversubscribed, and the scales are bumped. That's what we've been seeing. I suspect it will continue next week, as well."

Bond funds continue to look for paper. And the market's tone seems very firm and very positive, Dalpiaz said.

"I suspect it will continue," he added. "If municipal yields back up, it'll be because Treasury yields are doing something, but not because supply isn't being digested."

Looking closer at the numbers, there are $4.60 billion of municipal bond sales scheduled for negotiated sale this week, versus a revised $3.56 billion that were sold last week. Bonds scheduled for competitive sale this week total $1.28 billion, compared with $1.72 billion last week.

None of the week's negotiated deals should break $500 million. Morgan Stanley is expected to price $400 million of Connecticut general obligation bonds in both taxable and tax-exempt series. The bonds, slated to arrive Tuesday, are rated Aa3 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings.

Bonds in the first series, $220 million of taxable GOs, are expected to arrive structured as serials, maturing in 2014 through 2022. Credits in the second series, $180 million of tax-exempt GOs, should reach the market structured as serials, maturing in 2013, 2022 through 2028, and 2030 through 2032.

On the competitive side of the ledger, New Jersey had been expected to auction $2.6 billion of tax and revenue anticipation notes Tuesday, until the announcement of the deal's postponement. The notes were set to mature on June 27, 2013. At press time the state had applied for ratings.

The University of Washington should auction $279.2 million of general revenue bonds. The bonds are rated Aaa by Moody's and AA-plus by Standard & Poor's.

They bonds are expected to arrive Tuesday, structured as serials.

Over the past week, the deal for $550 million in California GOs, which traders said arrived priced aggressively, set a positive tone for the market, according to Daniel J. Genter, chief executive officer and chief investment officer of RNC Genter Capital Management. And its reception highlighted the robust and enduring nature of investor demand in the marketplace.

"The Cal deals have been the bellwethers for the muni market," Genter said. "Those have done very well. You're seeing there's a significant amount of demand."

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