The borrowing binge for education continues. Education bond sales increased 49% in the first six months of 1992, as Wall Street firms underwrote $20.81 billion on 1,720 deals, up from $13.9 billion and 1,608 issues during the first half of 1991, according to data compiled by Securities Data Co./Bond Buyer.

Bond financing rose a healthy 46% in the second quarter of 1992, to $11.99 billion from $8.22 billion a year ago, following a 55% jump in the first quarter, to $8.82 billion from $5.71 billion. The second-quarter total was the biggest quarter ever for education bonding, exceeding the $11.92 billion sold in the fourth quarter of 1985.

Investment bankers and public officials attribute the continued strength of education bonding to a confluence of several factors: historically low interest rates and schools and universities' need to expand their facilities and make improvements deferred since the mid-1980s.

Municipalities issued the largest chunk of volume, accounting for 1,441 deals worth $12.75 billion. State agencies were the runners-up issuing 136 deals worth $4.83 billion. Public colleges sold 86 deals to investors, raising $1.7 billion, while local authorities issued 47 deals to raise $994 million, and state governments sold 10 deals worth $525 million.

"The market is red hot and this is making it possible for [educational institutions] to upgrade their facilities," said David M. Cyganowski, director and head of the higher education financing group at First Boston Corp. "A lot of these institutions did not raise money during the 1980s, but now they are taking advantage of the market."

Charlie Bell, a public finance associate at Glickenhaus & Co., attributed the sharp increase in education bonds, particularly in the area of primary education, to burgeoning enrollment and the growing need to maintain facilities.

Bonding for primary education grew more than any other category. Primary education, which accounts for elementary schools and junior and senior high schools, grew $4.7 billion, or 50%, in the first half.

Investment banks sold 1,430 deals totaling $14.04 billion for primary education, compared with 217 deals totaling $4.45 billion for higher education, 38 issues worth $2.27 billion for student loans, and 11 issues totaling $115 million for miscellaneous education projects.

"A lot of this [primary education] bonding is based on need," Mr. Bell said. "There's a greater awareness that schools across the country are in shambles."

In addition, bankers say, now is an excellent time to refund old issues, especially those sold during the mid-1980s, when interest rates most recently peaked.

Refundings accounted for $9 billion, or 43%, of the education total for the first half, a whopping $153% increase from the $3.5 billion and 25% share of the volume that refundings accounted for in the same period in 1991.

New money accounted for $11.8 billion of education bonds, a 14% increase above the $10.38 billion sold a year ago.

Thomas A. Devane, deputy executive director of the New York State Dormitory Authority, said four of the seven deals the authority's board is scheduled to vote on during its Aug. 5 meeting involve issuance of bonds to refund some portion of an old issue. These deals include issues for the Culinary Institute of America, Union College, Teachers College of Columbia University, Hartwick College, and Marist College.

"The lower rates give many of these colleges the opportunity refund issues sold in the mid-1980s," Mr. Devane said." Although there's some new money involved, there's a lot of refunding going on."

Mr. Cyganowski said refunding could save a school district or university more than 200 basis points in interest expense. "Many of these deals sold at 8% to 9% in 1987, and they are going for around 6% today," he said. "Interest rates are the lowest they're been in 15 years."

A case in point is a $120 million deal for Thomas Jefferson University in Philadelphia, issued by First Boston through a negotiated sale. Mr. Cyganowski said the 30-year deal will sell at an interest rate "near 6%" to raise new money and refund existing debt.

Mr. Cyganowski and others say much of the new money financing is a consequence of the huge amounts of deferred maintenance that universities are beginning to tackle. Investment bankers say universities have put off as much as $10 billion in maintenance projects since the mid-1980s, largely because of a lack of funds and unfavorable market conditions. But with interest rates at their lowest levels in years, officials at many universities reckon the time is right to complete these improvements.

"There's a tremendous amount of pent-up demand for these capital improvements," said William H. Vogt, a vice president at Morgan Guaranty Trust Co. "These are improvements at both state and private universities."

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