Refundings finally began to cool down slightly last month, but total long-term municipal bond sales for 1993 continued to grow at a heated pace.

State and local governments sold $220.02 billion of bonds in the first three quarters of 1993, up 28% from $172.23 billion in the same period a year ago.

And for the first time this year, refundings made up less than 60% of total new issues for a month. In September, refundings totaled $12.81 billion, or 59% of bond deals, compared with 67% in August.

However, for the first nine months of 1993, refundings were still up 64%, to $146.37 billion from $89.41 billion a year earlier. They still accounted for two-thirds of all deals sold in 1993.

New money deals continued to be far off last year's pace. The deals were down 23% last month to $8.93 billion from $11.51 billion and have fallen 11% so far in 1993, to $73.65 billion from $82.82 billion a year ago.

Most of the purposes sectors continued to grow in double digits through three quarters, with only two sectors -- housing and industrial development -- showing declines.

Housing bonds were off 19%, to $9.89 billion from $12.15 billion, resulting primarily from the sunset of tax exemption for mortgage revenue bonds on June 30, 1992. However, in September housing bond issuance more than doubled to $2.13 billion from $978 million in September 1992.

"The Budget Reconciliation Act of 1993 made permanent extensions for tax-exempt single-family housing bonds," said Vincent Barberio, senior vice president with Fitch Investors Services, "The 15-month hiatus is over, and issuers are coming back into the market. This will probably continue for the rest of the year."

Industrial development deals fell 15% to $4.74 billion from $5.57 billion in the same period last year. In September, the deals plunged 85% to $138 million from $294 million.

Education, the largest specific purpose category, rose 22%, to $36.59 billion from $29.9 billion. Last month, education financing surged 59% to $3.63 billion from $2.27 billion, led by $1.04 billion in student loan financing deals.

In fact, in the third quarter of 1993, a record $2.45 billion of student loan deals were sold. Betsy Hill of Fitch said that the Budget Reconciliation Act of 1993 includes a provision that wipes out the floor on variable-rate student loan debt. All issues sold prior to Oct. 1 have a 9% floor.

Electric power deals doubled to $24.66 billion from $11.7 billion. Utilities rose 43%, to $27.76 billion from $19.46 billion. Transportation financing had the slowest growth of the major sectors, rising only 7%, to $23.42 billion from $21.9 billion. In September, transportation deals dropped 26%, to $2.1 billion from $2.84 billion.

Health care deals increased 38%, to $22.63 billion from $16.45 billion. Public facilities deals also doubled, to $10.95 billion from $5.27 billion. And environmental facilities deals climbed 33%, to $7.49 billion from $5.62 billion.

Negotiated offerings rose 32% through the first nine months of 1993 to $177.94 billion from $135.17 billion, while competitively bid sales increased 16%, to $40.55 billion from $34.93 billion. Private placements continue to lag behind last year's figures, dropping 28% to $1.53 billion from $2.13 billion.

However, last month there was a reversal for the year's trend. Negotiated deals were up only 6% in September compared to a year earlier, rising to $17.27 billion from $16.35 billion. Competitive deals jumped 47% to $4.4 billion from $2.99 billion in 1992.

Bonds subject to the alternative minimum tax have plunged 24% so far this year, to $8.8 billion from $11.56 billion. Taxable deal pole-vaulted 63%, to $5.93 billion from $3.63 billion.

The use of bond insurance to enhance municipals continued climbing, rising 43% to $83.31 billion from $58.27 billion. Bonds backed by bank letters of credit were up 45%, to $8.78 billion following along with a 12% increase in variable-rate financings, to $12.84 billion. Bonds secured by insured mortgages or collateralized by mortgage securities plummeted 51%, to $2.1 billion.

Bonds sold by public universities and colleges rose 4%, to $3.79 billion.

California issuers remained the most active in the market, bringing $28.27 billion to market, up 61% from $17.67 billion the year before. New York was second, with a 25% increase to $20.27 billion; followed by Florida, up 40% to $14.49 billion; Texas, down 4% to $12.87 billion; and Pennsylvania, up 28% to $11.7 billion.

Securities Data's figures are preliminary and subject to substantial revision. For instance, the monthly volume increased by more than $3 billion to $24.93 billion from $21.79 billion.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.