WASHINGTON - Attempts to pack a year's worth of mortgate revenue bond issuance into six months caused total housing bond issuance for the first half of 1992 to soar to $10.1 billion, up 81.2% from the $5.6 billion sold in the same period last year, according to Securities Data Co./Bond Buyer.

Mortgage bond issuance alone totaled $7.2 billion, up 74.8% from the same period a year ago, when $4.1 billion was issued. Housing lobbyists said the sharp increase reflected issuers' expectations that the mortgage bond exemption would die as scheduled on June 30.

"These spikes are a function of sunset dates forcing people to go to market at times they would otherwise choose not to," said John T. McEvoy, the executive director of the National Council of State Housing Agencies.

June was the biggest month for mortgage bonds, with issuers selling $4.43 billion to beat the expiration date. That total represented a 280% increase over the $1.16 billion sold in the year-ago period.

The total number of housing bond deals in the first six months of this year rose to 401, up from 276 in the first six months of 1991. Mortgage bond deals in the first half of 1992 totaled 226, up from 159 the previous year.

Congress has granted a series of temporary extensions to the mortgage bond exemption since 1988, but this was the first time the exemption was eliminated so early in the year, and the first time the exemption actually expired since 1990.

The mortgage bond exemption was allowed to die on Sept. 30, 1990, but was renewed by Congress several weeks later, and extended through Dec. 31, 1991. Last year, Congress granted only a six-month reprieve, setting up the rush to market that occurred over the last few months. Capitol Hill watchers have said Congress is likely to renew the exemption this fall.

The scramble to issue mortgage bonds as quickly as possible in 1992 was heightened by the federal government's failure earlier in the year to push through a tax bill that would have extended the mortgage bond exemption through Dec. 31, 1993, housing lobbyists said. Congress approved the bill in March, but President Bush vetoed it because it contained tax increases on upper-income taxpayers.

"The obvious uncertainty, given the fact the President vetoed the first tax bill, I think gave issuers some cause for concern," said John C. Murphy, executive director of the Association of Local Housing Finance Agencies. "If they were going to do an issue this year, they were sure to do it prior to June 30."

Mr. McEvoy also noted that this year and 1991 contrasted sharply because issuers rushed to market before the Sept. 30, 1990, expiration date, and failed to come to market again early in 1991. The 1991 figures reflect "a hangover from sunset the previous fall, [when] people had issued a great deal," he said.

Multifamily housing bond issuance, a much smaller segment of the market, also rose sharply, totaling $2.93 billion in the first half of 1992. That figure is nearly double the $1.47 billion issued during the same time a year ago. The number of deals rose to 175 from 117.

The increase in overall housing bond issuance was generated mainly by state agencies, which sold 208 issues totaling $8.27 billion in the first half of 1992, compared with 122 issues totaling $3.2 billion last year, a jump of 160%.

Local housing authorities saw a decline in housing bond issuance of 19.6% to $1.2 billion from $1.6 billion a year ago. The number of deals rose to 138 from 97. Issuance by local governments dropped to 54 deals totaling $551.9 million in the first half of 1992, from 57 deals totaling $862.6 million.

Issuance of housing bonds subject to the alternative minimum tax rose 50%, to $3.3 billion, from $2.2 billion in the first six months of 1991. Taxable debt rose only slightly, to $306 million, a 1.5% rise from $301 million in the year-earlier period.

Variable-rate housing bond issues skyrocketed 500%, to $3.6 billion, from $604 million in the first half of 1991. The number of deals doubled, to 104 from 58.

The amount of housing bonds issued as bank-qualified debt soared to $197 million from $16 million in the year earlier period, and the number of bank-qualified issues rose to 22 from 5.

Issuance of mortgage-backed bonds rose to $2.5 billion, a 45% jump from the $1.7 billion issued in the first half of 1991, though the number of deals rose only slightly, to 123 from 104.

The use of both bond insurance and letters of credit declined in the first six months of 1992. Issues backed by bond insurance fell 9.2% to $538.7 million from $593.4 million. Issues backed by letters of credit fell 58.7% to $144.2 million from $349.3 million.

Goldman, Sachs & Co. regained the top senior manager position after losing it last year, managing a total of $1.99 billion in housing bond issues. PaineWebber Inc. served as senior manager on $1.17 billion of housing bond deals, to place second for the six-month period. Merrill Lynch & Co., the top senior manager for the first half of 1991, placed fifth, having managed $911 million during the first six months of this year.


Senior Managers


Manager ($ mils.)

1 Goldman Sachs $1,991

2 PaineWebber 1,168

3 First Boston 1,104

4 Lehman Brothers 957

5 Merrill Lynch 912

6 Bear Stearns 884

7 Smith Barney 232

8 Donaldson Lufkin 231

9 A.G. Edwards 186

10 Morgan Keegan 155

Issues for nursing home and life-care communities,

private placements, short-term

notes, municipal forwards, and remarketings

are excluded.

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