Sales of bonds used to finance electric, water, sewer, and other utilities surged 34% in the first half of 1991, to $12.27 billion from $9.15 billion a year ago, according to figures compiled by Securities Data Co./Bond Buyer.
Sales of public power issues surged 44%, to $3.81 billion from $2.64 billion, as both new-money and refunding issues increased. Sixty-eight electric power issues came to market during the first half, up from 51 in the same period in 1990.
Bond sales for municipal utilities, which include water, sewer, gas, and telephone systems, increased 30% in the first half of 1991, to $8.45 billion from $6.52 billion, as local governments and authorities increased issuance sharply. The number of issues rose by little more than 3%, to 580 from 561 the year before.
Securities Data's figures are preliminary and subject to revision. They are based on long-term bonds maturing in 13 months or longer. Private placements are included, but remarketings of outstanding debt and taxable issues sold by private nonprofit electric cooperatives are excluded. The municipal utility group includes sales by combined utilities in which substantial portions of the proceeds may be used for electric power as well as water, sewer, and gas projects.
New-money issuance for public power jumped 84% in the first half of 1991, to $1.47 billion from $798 million the year before. Refundings, which still account for most public power issues, reversed last year's declining trend and increased 28%, to $2.35 billion from $1.84 billion.
Goldman, Sachs & Co. was the top underwriter for electric power bonds for the first half of 1991, managing $791 million. Smith, Barney Harris Upham & Co. ranked second, with $487 million, followed by First Boston Corp., with $452 million; PaineWebber Inc., with $431 million; and Merrill Lynch Capital Markets, with $352 million.
New-issue sales for electric power reached their high point for the year to date in April, when 18 issues totaling $1.22 billion were sold, after ranging from $600 million to $700 million a month in the first quarter. But sales tailed off after April, to 14 issues worth $496 million in May and just four issues totaling $189 million in June.
Tax-exempt bonds, which make up the vast majority of public power issues, rose 39% in the first half, to $3.55 billion from $2.55 billion. Bonds subject to the alternative minimum tax jumped to $260 million, from just $55 million. Only one $2 million issue was taxable, compared with two issues totaling $35 million in the first half of 1990.
Public power issuers negotiated the sale of $3.43 billion of bonds in the first half of 1991, up 46% from $2.35 billion for the same period in 1990. Competitive issuance rose 17%, to $343 million from $292 million, and private placements rose to $39 million from $700,000 in the same period of 1990.
The use of bond insurance jumped 136% in the first half of 1991, to 21 issues totaling $1.41 billion, compared with 11 deals totaling $597 million in the first half of 1990. Three issues, totaling $398 million, used letters of credit, compared with one $34 million issue the year before.
Local governments and authorities increased sales of electric power bonds markedly in the first half of 1991, although state authorities remained the largest issuing group. Local agencies increased their sales 138%, to $939 million from $394 million, and cities, counties, and local districts boosted their sales 78%, to $1.21 billion from $678 million. State authorities increased their sales 7%, to $1.67 billion from $1.56 billion the year before.
There were no state government issues, compared with three totaling $7 million in the first half of 1990.
Municipalities and local agencies also accounted for most of the increase in bond sales for water and sewer utilities, as well. Local governments, which account for more than half of all utility issues, increased their sales 37% in the first half, to $4.84 billion from $3.53 billion in the same period last year. Local authority issues also rose 37%, to $2.16 billion from $1.57 billion.
State governments sold five utility issues, totaling $330 million, in the first half of 1991, up sharply from $40 million in the same period a year ago, but state authority issues dropped a little more than 19%, to $1.11 billion from $1.37 billion.
Smith Barney was the lead manager for utility bonds in the first half of 1991, underwriting $1.2 billion. It was followed by Goldman Sachs, with $980 million; PaineWebber, with $756 million; Morgan Stanley & Co., with $506 million; and Bear, Stearns & Co. with $493 million. Issuers sold more than $1 billion of utility bonds evry month in the first half of 1991. June was the biggest month for the year to date, with $1.97 billion of new issues.
Water and sewer projects remain the primary purpose for municipal utility financing, accounting for $6.57 billion of bonds in the first half of 1991. That represented a 20% increase from $5.49 billion for the same period in 1990.
Combined utility issues, which may include substantial amounts of proceeds for electric power as well as water and sewer, posted a 112% jump in sales, to $1.41 billion from $667 million.
Sanitation issues nearly tripled, rising to $280 million from $100 million the year before. Natural gas systems posted a 19% decline, to $159 million from $197 million. Flood control bond sales dropped 43%, to $34 million from $60 million. No telephone utility issues were sold in the first half of 1991, down from a single $1.6 million sale in the same period the year before.
Refundings more than doubled in the first half, to $2.75 billion from $1.32 billion the year before, while new-money financing rose a lesser 10%, to $5.71 billion from $5.2 billion.
Issuance of tax-exempt utility bonds increased 32% from the first half of 1990, to $8.36 billion from $6.34 billion the year before. Issues subject to the minimum tax declined 52%, to $79 million from $163 million, and taxable issues remained at a negligible level of $12 million, up from $11 million the year before.
General obligation issues jumped 93% in the first half, to $1.57 billion from $811 million the year before. Revenue bond sales rose 21%, to $6.89 billion from $5.7 billion.
Negotiated sales climbed 46%, to $6.3 billion from $4.32 billion. Bonds sold through competitive bidding rose just 7%, to $2.14 billion from $2.01 billion. Private placements plunged 92%, to $14 million from $190 million.
Variable-rate financing plummeted 77%, to $32 million in 1991 from $139 million fro the period in 1990.
Bond insurance was used to enhance $3.28 billion of municipal utility bonds in the first half of 1991, up 27% from $2.6 billion for the period in 1990. Letters of credit were used on only three issues totaling $63 million, compared with four issues totaling $94 million the year before.
