Sales of new municipal bonds rose 23% in the first seven months of 1991, to $85.8 billion, a record for the period, as low interest rates continued to draw issuers to market in droves, according to figures compiled by Securities Data Co./Bond Buyer.
The $16.11 billion increase in new-issue volume, from $69.69 billion in the January-July 1990 period, was fueled by 23% increases in new-money and refunding issues. New-money financing rose to $66.5 billion, from $54.05 billion a year ago, and refundings jumped to $19.29 billion, from $15.64 billion.
Low interest rates spurred issuers to sell new issues in July, just as they have all year. Municipal bond yields, as measured by the average yield to maturity of the 40 bonds used to calculate the Bond Buyer Municipal Bond Index, have fallen 45 basis points since Jan. 16, when it reached its 1991 high of 7.52%, and yesterday dropped to 7.07%, its lowest level since March 26, 1987.
Bond salesd rose 31% in July, to $10.82 billion from $8.25 billion in July 1990. It was only the fourth time that bond sales have topped $10 billion in July. As a result, the market smashed through the previous record for bond sales in the first seven months of the year, set at $77.39 billion in 1986.
Securities Data's figures are preliminary and subject to revision. The long-term figures are based on securities with final stated maturities of 13 months or longer. Private placements are included, but re-marketings of outstanding debt and taxable issues sold by private non-profit organizations, such as private colleges and electric cooperatives, are excluded.
Bond sales for education, the leading specific purpose for municipal financing, rose 12% through July, to $16.05 billion from $14.32 billion. Education's share of the market dropped, however, to 18.7% from 20.5% a year ago. The entire increase was in primary and secondary education, where sales jumped 33%, to $10.4 billion from $7.82 billion.
Municipal utilities, the second-leading purpose, rose 31% in the first seven months of 1991, to $9.32 billion from $7.1 billion. Bonds used to finance electric power projects soared 75%, to $4.91 billion from $2.8 billion a year earlier.
Health-care issuance, the third-leading purpose, increased 22%, to $8.41 billion from $6.9 billion. Bonds used to finance hospitals jumped 29%, to $7.99 billion from $6.2 billion, more than offsetting a 13% drop in bonds for nursing homes and life-care projects, to $616 million from $706 million.
Environmental issues soared 61%, to $4 billion from $2.48 billion last year. Pollution control issues almost doubled, to $2.51 billion from $1.31 billion. Solid waste issues rose 25%, to $1.48 billion from $1.18 billion.
Bond issuance for public facilities was up a strong 31% to $3.71 billion from $2.83 billion. New issues for jails and prisons rose 70%, to $1.12 billion from $658 million, and recreation issues rose 25%, to $1.78 billion from $1.42 billion.
Sales of general purpose and multipurpose bonds jumped 51%, to $23.29 billion, or 27.1% of total issuance, from $15.46 billion, or 22.2% last year. The three largest issues sold so far this year -- $1.26 billion by California, $1 billion by New York City, and $910 million by the New York Local Government Assistance Corp. -- were all general purpose issues. Twelve of the $50 million-plus issues sold in July fell into this category.
Those increases more than made up for the declines in the three remaining categories. Housing was off 15%, to $6.8 billion from $7.97 billion. Transportation fell 3%, to $7.08 billion from $7.3 billion, as a 24% increase in bonds for roads and highways could not make up for a 32% drop in airport volume. Industrial development decreased 12%, to $2.23 billion from $2.52 billion.
Taxable municipal bond issuance rose 6% through $1.31 billion. Bonds subject to the alternative minimum tax dropped 33%, to $6.9 billion from $10.29 billion, primarily because of the decline in airport and single-family housing issues.
Negotiated bond sales rose 20%, to $60.5 billion from $50.22 billion, while competitive sales increased 32%, to $23.7 billion from $17.99 billion. Private placements were up 8%, to $1.6 billion from $1.48 billion.
General obligations bond sales were up 32%, to $29.97 billion from $22.75 billion, while revenue bond volume increased 19%, to $55.83 billion from $46.94 billion.
Variable-rate financing declined 4%, to $5.48 billion from $5.72 billion.
Bonds backed by bond insurance soared 44%, to $26.17 billion from $18.13 billion, and insured bonds' share of the overall market rose to 30.5% from 26% a year ago.
Other credit enhancements fared less well. Bonds secured by letters of credit were down 31%, to $4.2 billion from $6.08 billion. Issues backed by insured mortgages or collateralized by mortgage securities fell 30%, to $2.14 billion from $3.07 billion.
Municipal bonds sold by state governments increased 21%, to $8.79 billion from $7.24 billion, and state agency issues slipped 3%, to $21.71 billion from $22.32 billion. Bonds issued by municipalities soared 43%, to $38.27 billion from $26.82 billion, while local authority sales were at $14.58 billion, up 19% from $12.27 billion last year. Bond sales by public colleges and universities more than doubled, to $2.45 billion from $1.03 billion.
California issuers were the most active through July, bringing $12.91 billion to market, up 45% from $8.91 billion last year. New York issuers came in second with a 2% increase, to $9.91 billion from $9.72 billion. The two states together accounted for about 27% of the total volume.
Next came Texas, whose bond sales skyrocketed 67%, to $6.43 billion from $3.85 billion; Pennsylvania, up 93%, to $5.49 billion from $2.84 billion; and Florida, up 55%, to $4.64 billion from $2.99] billion.
