Goldman, Sachs & Co. continued to dominate municipal bond underwriting in what was the industry's biggest first half ever, according to figures compiled by Securities Data Co./Bond Buyer.
Goldman was the leading senior manager in the first six months, with 141 issues totaling $11.2 billion.
New-issue volume rose 18.8% in the first half of 1991, to $71.75 billion, the most ever for the period. The previous record was set last year, when $60.4 billion of bonds were issued. The 4,331 issues sold by state and local governments was also a record for the first half, exceeding the old record of 4,232 issues marketed in the first half of 1989. These figures do not include private placements.
Goldman, which finished second last year behind Merrill Lynch, surged into the lead in the first quarter and lengthened it in the second quarter by dominating all four major underwriting categories -- negotiated, competitive, revenue, and general obligation bonds.
Goldman's $11.2 million senior-manager total accounted for 15.6% of the first half's volume and was more than the combined $11.16 billion handled by the second-place and third-place managers, Merrill Lynch Capital Markets and First Boston Corp. Goldman's underwriting activity increased in the second quarter, to $5.88 billion from $5.32 billion in the first quarter, although its market share declined, to 14.2% in the second quarter from 17.5% in the first.
Merrill Lynch, which ranked first in 1990, managed 182 issues totaling $6.46 billion in the first half of this year. It moved up from third place in the first quarter to take second place at the end of June by managing $4.12 billion of bonds in the second quarter.
First Boston, which ranked third for all of 1990, managed 59 issues totaling $4.698 billion in the first half -- just $1 million more than the fourth-place firm, Lehman Brothers, which managed 170 issues totaling $4.697 billion.
Goldman dominated the negotiated bond sector by a massive margin, with 121 issues totaling $8.85 billion -- more than $4 billion ahead of its nearest competitor, Merrill Lynch, which negotiated $4.76 billion of new issues. Goldman was senior manager for this year's largest negotiated issue to date, a $910 million New York Local Government Assistance Corp. revenue bond issue on Feb. 21.
The firm had a much smaller lead in the competitive market, heading the winning syndicates for 20 issues totaling $2.34 billion. That was $630 million more than the second-place firm, Merrill Lynch, which lead-managed 101 competitive issues totaling $1.71 billion. More than half of Goldman's competitive total was won in a single sale on Feb. 27 -- California's $1.26 billion general obligation issue, which is this year's largest issue to date, the fifth-largest municipal bond issue on record, and the largest competitive sale ever.
The New York Local Government Assistance Corp. and California issues also helped put Goldman on top in underwriting revenue bonds, with 127 issues totaling $8.31 billion, and general obligation bonds, with 14 issues totaling $2.88 billion. Merrill Lynch was a distant second in revenue bond underwriting, with $4.49 billion, and Lehman Brothers was a closer second in general obligation bonds, with $2.14 billion.
In the overall long-term rankings, fourth-place Lehman Brothers was followed by Smith Barney, Harris Upham & Co. with $3.85 billion; Morgan Stanley & Co. with $2.9 billion; Bear, Stearns & Co. with $2.83 billion; PaineWebber Inc. with $2.77 billion; Prudential Securities Inc. with $2.01 billion; and Kidder, Peabody & Co. with $1.19 billion.
Dean Witter Reynolds Inc. missed making the cut for the Top 10 list by a mere $6 million, with $1.18 billion. Next came First Chicago Capital Markets, the highest-ranking commercial bank in the first half, in 12th place with $1.09 billion.
Nearly two-thirds of the first six months' increase in new-issue volume over 1990 was in general purpose bond sales, which rose $6.56 billion, or 40%, to $23.09 billion from $16.53 billion. Substantial increases also were reported for environmental facilities, up 69%, to $3.78 billion from $2.23 billion; electric power, up 43%, to $3.78 billion from $2.64 billion, and utilities, up 29%, to $8.01 billion from $6.22 billion.
Health-care financing rose a lesser 13%, to $6.84 billion from $6.04 billion. Education bond sales increased 12%, to $13.42 billion from $12.02 billion, and remained the leading specific purpose for municipal financing.
Housing bond sales suffered the largest decline in the first half, falling $1.48 billion, or 23%, to $5 billion from $6.48 billion a year earlier. Other declines were reported for industrial and economic development issues, down 8%, to $1.75 billion from $1.91 billion; and transportation, down 4%, to $6.09 billion from $6.33 billion.
General obligation bond sales, led by California's billion-dollar offering, two massive New York City sales, and a number of large state government issues, rose 28% in the first half, to $25.68 billion from $20.05 billion the year before.
Revenue bonds, which make up about two-thirds of the market, rose a smaller 14%, to $46.07 billion from $40.34 billion. The New York Local Government Assistance Corp. led this group with two sales, the $910 million sale in February and a second sale, for $558 million, on June 19.
Bonds sold through competitive bidding jumped 25% in the first half, to $20.25 billion from $16.21 billion in the same period a year ago. Negotiated sales rose 17%, to $51.5 billion from $44.18 billion.
New-money financing rose 18%, to $55.39 billion from $46.78 billion, while refunding bond sales rose 20%, to $16.36 billion from $13.62 billion.
Sales of taxable municipal bonds rose 20% in the first half, to $1.21 billion from $1.01 billion the year before. The New Hampshire Industrial Development Authority had this year's biggest taxable sale to date, a $229 million sale on May 15, and New York City sold two large issues, totaling $315 million, in February and June.
Securities Data's rankings and new-issue totals are based on long-term bonds maturing in 13 months or longer. Private placements, short-term notes, remarketings of outstanding bonds, and taxable debt issued directly by private, nonprofit organizations are excluded. Securities Data obtained the information from sources believed to be reliable, but it does not guarantee that the data are accurate and complete.
The tables accompanying this article are more abbreviated than in the past, because the information was provided directly by Securities Data, rather than compiled by The Bond Buyer from Securities Data's data base. The Bond Buyer will publish more comprehensive statistics on new-issue sales and industry rankings for the first half of 1991 on July 22.