Municipal issuers sold $10.03 billion of bonds for transportation projects through the third quarter of this year, an increase of 36.2% from the same period in 1990, according to figures complied by Securities Data Co./Bond Buyer.

Overall, the aging of the nation's infrastructure should continue to drive governments and authorities to sell bonds, analysts say.

"Long-term, I think that the transportation needs and the dollars required are going to only increase, for airports and bridges and highways," said Todd Whitestone, a managing director at Standard & Poor's Corp. "The numbers that we've seen are very big. Just look around New York in terms of the bridges and what they've got to do there, I think you can see that a lot needs to be done."

A number of developments in Washington also should bolster issuance in the coming years, according to Thomas W. Bradshaw, director of transportation bond underwriting at First Boston Corp. and a former North Carolina transportation secretary.

"It's become pretty obvious that there's a limited amount of money that's going to be coming out of Washington," Mr. Bradshaw noted. He said the magnitude of projects, combined with declining aid from Washington, will draw new issuers to the transportation bond market.

And, he added, new passenger facility


Senior Managers


Manager ($ mils.)

1 Goldman Sachs $1,617

2 First Boston 1,128

3 Smith Barney 1,101

4 Bear Stearns 951

5 Merrill Lynch 910

6 Dean Witter 741

7 Dillon Read 590

8 Prudential Securities 439

9 PaineWebber 307

10 Morgan Stanley 300

Airport and seaport issues are included.

Source: Securities Data Co. (10/6/91)

charges of as much as $3 per ticket could increase volume for airport projects.

Donna LoCascio, a vice president in the municipal research department of Donaldson, Lufkin & Jenrette Securities Corp., said that falling interest rates this year are combining with infractructural deterioration to goad issuers to market for transportation projects they might have otherwise put off.

She also said much of this year's volume, in addition to the Denver Airport financings, stemmed from refinancings by the New Jersey Turnpike Authority and by the Triborough Bridge and Tunnel Authority's refunding of mortgage recording tax bonds, whose revenue stream dried up as the real estate market by lay stagnant.

Goldman, Sachs & Co. distinguished itself by serving as bookrunning manager on a greater volume of transportation bonds than any other firm in the nine-month period. The $1.61 billion of bonds sold under Goldman's supervision accounted for 16.1% of the market this year, according to Securities Data's figures.

Smith Barney, Harris Upham & Co. served as senior manager on the largest number of transportation bond issues, with 17 deals worth a total of $1.1 billion or an 11% share of the market's principal amount. First Boston Corp. served as senior manager on nine deals amounting to $1.12 billion, or 11.3% of market activity in the first nine months of 1991. That put First Boston in second place.

The top issuer during the three-quarter period was New York's Triborough Bridge and Tunnel Authority, which borrowed $1 billion in five separate issues. It was followed by the Denver City and County, whose issuance took off because of the Denver International Airport project. So far this year, Denver City and County have sold $700 million in four deals.

The New Jersey Turnpike Authority came in third, raising $500.2 million in two issues. It was followed closely by the Port Authority of New York and New Jersey, which sold $500.6 million, and by the Los Angeles County Transportation Commission, which raised $500 million.

Ms. LoCascio of Donaldson Lufkin predicted that by the end of the year, the New Jersey Turnpike Authority will have assumed the lead position, after it refunds some $1.5 billion of outstanding debt. It will be followed, she said, either by the Triborough Bridge and Tunnel Authority or by Denver.

In the legal arena, the New York firm of Mudge, Rose, Guthrie, Alexander & Ferdon outdid all others, serving as bond counsel on seven deals totaling $1.27 billion, according to Securities Data figures.

Among financial advisers, Lazard, Freres & Co. prevailed, with six deals totaling $1.23 billion giving the firm a 12.3% market share. Public Financial Management Inc., the Philadelphia-based municipal finance consulting firm, placed second, with its work on 12 transportation deals worth a total of $1.12 billion giving it an 11.3% share of the $10 billion in issuance so far.

Perhaps most striking among the figures for the January-to-September period this year was the increase in negotiated offerings for transportation projects. So far this year, negotiated offerings for transportation have reached $8.54 billion, an increase of 11.5%, compared with the $7.66 billion brought to market by negotiation in the same period last year.

Correspondingly, competitive bidding of deals dropped off, with the $1.47 billion in competitive deals 4.8% below last year's $1.54 billion.

Revenue bond issuance also outpaced that of general obligation bonds for transit-related purposes, with $9.23 billion of bonds sold backed by such specific revenues as tolls, and only $799.4 million by general taxing powers.

The use of variable-rate debt for infrastructural projects surged, as more issuers saw a window of opportunity in the prospect of declining interest rates. While still a small portion of the market, the $899.9 million issued in the first three quarters of 1991 represented an increase of $127.4% from the $391.4 million borrowed at variable rates in the first three quarters of 1990.

Taxable debt issuance for transportation fell during the period, with the $14.4 million of taxable bonds sold 56.6% below last year's 33.2%. Transportation bonds subject to the alternative minimum tax also sagged, with $1.7 billion marketed in the period, a 50.3% decline from the $3.45 billion of AMT transportation bond issues in last year's first nine months.

Use of bond insurance edged up slightly, to a 29.2% market share from a 28.8% market share in the first three quarters of 1991. The use of letters of credit, however, slumped, with LOC-backed transportation deals accounting for only 3.3% of market share, compared with 5.7% last year.

State governments and their agencies shouldered greater financial burdens for transportation as overtaxed and cash-hungry local governments lightened their loads. State government issuance, at $1.54 billion, was 30.7% above last year's $1.17 billion figure, and agency issuance, at $3.75 billion, posted a 37.7% increase over last year's $2.72 billion.

The third quarter of this year, when states and their subdivisions borrowed $3.63 billion for projects ranging from airports to seaports, brought the highest percentage increase relative to its corresponding quarter in 1990. In the third quarter last year, municipalities borrowed $2.66 billion.

This year's heaviest issuance came during the second quarter, when the municipal transportation projects tapped capital markets for $4.57 billion.

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