Transportation debt issuance climbed 115.1% over the first nine months of the year, with 392 issues totaling $20.6 billion, compared to the same period last year.
According to data compiled by Securities Data Co., refundings continued their heated pace, jumping 264.6% over the period, with 117 issues totaling $8.2 billion. Analysts attributed the surge in refundings to the low interest rate environment.
However, Michael Lexton, senior vice president of transportation at Lehman Brothers, warned that the pace may slow in the future.
"Many of the refinancings that could be done have been done this year," he explained. "Even if interest rates stay low, there are not that many opportunities left for refinancings."
New-money issues, meanwhile, registered a 68.8% increase, with 275 issues totaling $12.3 billion.
With $9.8 billion, bond issuance for roads and highways led the pack for uses of proceeds, followed by airports with $5.2. billion, and mass transit with $3.1 billion.
Lexton pointed out that infrastructure continues to be a big area of need for issuers. He added that a Nov. 3 win by Democratic presidential candidate Bill Clinton could put an even greater emphasis on infrastructure.
"If Clinton wins, the high emphasis of his agenda will be on infrastructure, and the federal government clearly can't do it all," he said. "There will be a need for bond issuance by local issuers."
Apart from the election, Michael DelGiudice, a partner at Lazard Freres & Co., said transportation issuance should get a boost from federal funding included in the Intermodal Surface Transportation Efficiency Act of 1991.
"I think people are focusing on that," DelGiudice said, adding. however, that localities have not yet begun to issue debt as a result of the federal match they expect to receive under the act.
On a geographical basis, New York State governments saw the most transportation debt issuance over the nine-month period, with 17 issues totaling $2.9 billion. That sum included four issues totaling $1.2 billion by the Metropolitan Transportation Authority, four issues totaling $670 million by the New York State Thruway Authority, and one issue totaling $488 million by the Triborough Bridge and Tunnel Authority.
California was next with 34 issues totaling $1.6 billion. Florida came in a close third with 28 issues totaling $1.5 billion.
State agencies were the biggest issuers of transportation debt, with 57 issues totaling $8.6 billion, while municipalities had a larger number of issues at 224, totaling $5.3 billion.
Most of the overall transportation debt, $17.9 billion, was secured by revenues, while the remainder, $2.6 billion, was backed by a general obligation pledge. Bond insurance covered 113 issues totaling $8.1 billion, while letters of credit secured eight issues totaling $546 million.
The majority of the transportation issues were negotiated. Such issues outnumbered competitive issues by over two to one, with 273 negotiated issues totaling $18.4 billion versus 110 competitive issues totaling $2.1 billion. Nine private placements totaled $25.8 million.
Smith Barney, Harris Upham & Co. continued its reign as senior managing underwriter of transportation debt for the year so far, with 28 issues totaling $2.8 billion. Lehman Brothers has retained the second place slot since the midyear point, handling 29 issues totaling $2.6 billion. Goldman, Sachs & Co. remained in third place, with 14 issues totaling $2.2 billion.
On the bond counsel front, Mudge Rose Guthrie Alexander & Ferdon ranked first, with eight issues totaling $1.9 billion, followed by Trimble, Tate and Nulan, with five issues totaling $1 billion.
Lazard Freres was the top financial adviser for the nine-month period, with 15 issues totaling $3.3 billion. Public Financial Management Inc. came in second, with 25 issues totaling $1.8 billion.
