With major projects lagging, transportation deals plummet.

A decrease in airport financings and other major capital projects contributed to a 19.3% drop in transportation debt issuance in the third quarter from the same period last year.

"You can legitimately count the major project financings that are extremely capital intensive on your fingers," said Mark J. Tenenhaus, a first vice president at Dean Witter Reynolds Inc.

Tenenhaus said that the third-quarter decrease in transportation financings is a reflection of lagging new-money financings in all areas. He expects the negative trend to continue into next year.

While transportation issuance was off in the third quarter, financings in the sector were up 4.8% for the first nine months of the year. A total of $22.5 billion of debt was sold in 415 issues, according to figures compiled by Securities Data Co. Refundings in the first two quarters fueled most of the overall gain, and continuing low interest rates helped refundings surge 67% to $14.6 billion through the year's first nine months.

But new-money transportation financings slumped 38.1% to $7.9 billion during the first three quarters. The drop is more dramatic compared to other sectors because of a decrease in "massive" capital projects, such as those for airports, Tenenhaus said.

Other industry analysts also cited fewer airport issues as one factor contributing to the slowdown in transportation issues during the third quarter. The total dollar amount of airport issues dropped 25.2% to $4.18 billion during the first three quarters compared to last year.

Michael Lexton, a managing director and manager of the transportation financing group at Lehman Brothers, said that many airlines facing economic hardships have encouraged airports to postpone capital projects.

Meanwhile, the languid economy didn't stop the Puerto Rico Highway and Transportation Authority from selling the year's largest transportation bond issue to date, a $1.2 billion refunding in July. The deal was headed by Merrill Lynch & Co.

The San Joaquin Hills Transportation Corridor sold the year's second largest issue, $1.1 billion of revenue bonds in March in a deal headed by CS First Boston. The Triborough Bridge and Tunnel Authority in New York ranked third with a $595 million revenue bond issue headed by Dillon, Read & Co.

State authorities issued $10.1 billion of transportation debt so far in 1993, followed by local authorities, which issued $6.7 billion; local governments which issued $3.8 billion; and state governments, which issued $1.8 billion.

Overall, 277 negotiated deals totaling $19.6 billion and 132 competitive deals totaling $2.8 billion have come to market during the first three quarters this year.

From January to September, highways surpassed all other transportation issuance, accounting for $10.2 billion of debt in 189 issues, up 7.5% over last year. Mass transit issuance followed with $5.3 billion of debt in 42 issues, increasing 35.6% over last year.

Among the states, California ranked first in transportation issuance in the first three quarters with $3.94 billion of debt in 56 issues, followed by New York with $3.67 billion of debt in 21 issues and Florida with $2.17 billion of debt in 32 issues. Illinois ranked fourth, issuing $1.13 billion of debt in 16 issues. Puerto Rico sold the $1.2 billion highway refunding bonds.

Merrill Lynch & Co. claimed the top spot as bookrunning manager for transportation issues, handling $4.06 billion of debt in 21 issues during the first nine months of 1993. CS First Boston ranked second, handling $2.86 billion of debt in 18 issues, followed by Bear, Steams & Co., which handled $2.58 billion of debt in 10 issue's. Lehman Brothers ranked fourth, handling $1.974 billion of debt in 27 issues.

TRANSPORTATION

Senior Managers VolumeManager ($ mills.) 1 Merrill Lynch $4,063 2 CS First Boston 2,865 3 Bear Stearns 2,584 4 Lehman Brothers 1,975 5 Goldman Sachs 1,708 6 Smith Barney 1,649 7 PaineWebber 1,071 8 Dillon Read 848 9 Donaldson Lufkin 56410 Reinoso 561

Private placements, short-term notes, and remarketings are excluded. Source: Securities Data Co. (10/9/93)

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