New-issue municipal bond volume continued to surge through the first 10 months of 1992, rising 43% to $191.5 billion from $133.55 billion in the same period of 1991, according to figures compiled by Securities Data Co.
Although refundings continue to fuel the growth of long-term volume, in the past two months new-money issues have begun to keep pace.
Through October, refundings soared 138% from a year ago, to $90.62 billion from $38.06 billion, while new-money issuance advanced 6%, to $100.88 billion from $95.49 billion. But in the past two months, refundings have declined sharply, from $10.88 billion in August to $7.14 billion in September and $6.89 billion in October, while new-money issuance has picked up sharply, from $8.11 billion in August to $9.99 billion in September and $12.62 billion in October.
"In August, immediately after the July peaks [in prices], refundings were still somewhat greater than new money," said Robert W. Chamberlin, senior vice president with Dean Witter Reynolds Inc.'s municipal research and marketing department. "Then the market begins falling off from us. In October, there's a substantial turnaround, with refundings increasingly hard to do."
As for why issuers are still coming to market. Chamberlin said: "There has been a greater number of issuers who have been watching the market for the past two years, finally committing to come into the market. They're saying, ~Hey guys, we just hit the 14-year peak.' These issuers became the driving force of keeping the market going.
"What makes October particularly interesting is that if prices continue to deteriorate, there may be no real reason to believe there will be a sharp drop-off in new-money deals. You'll still have issues asking themselves 'are the terms still acceptable?' But are we going to sustain this phenomenal volume? I really don't know."
Bond financing rose for every purpose category but one. General purpose and multipurpose issues, the largest category, posted a 45% increase through October, to $51.97 billion from $35.76 billion, and education, the largest specific purpose, jumped 51% through October, to a record $33.19 billion from $21.96 billion a year ago.
Transportation bond sales more than doubled, to a 12-month high of $23.1 billion from $11.33 billion a year ago. Bonds sold for roads and highways soared 165%, to $10.59 billion from $3.99 billion. Airport financing jumped 93%, to $6.07 billion from $3.14 billion. Financing for seaport projects skyrocketed to $1.24 billion from $291 million a year ago.
Utilities were up 44%, to a record $20.88 billion from $14.54 billion. They were led by a 49% surge in water and sewer facilities, to $18.76 billion from $12.57 billion.
Health-care volume jumped 20%, to $17.68 billion; housing was up 22%, to $12.83 billion; electric power surged 76%, to $13.39 billion; industrial development increased 23%, to $6.14 billion; and environmental facilities advanced 15%, to $6.18 billion.
The lone purpose to show a decline was public facilities, which were off 8%, to $6.15 billion from $6.65 billion in the first 10 months of 1991.
Negotiated offerings surged 54%, to $149.54 billion from $97.05 billion, while competitively bid sales rose 18%, to $40.21 billion from $34.11 billion. Private placements dropped 27%, to $1.76 billion from $2.39 billion.
Bonds subject to the alternative minimum tax posted a 19% gain, to $12.51 billion from $10.5 billion, because of increases in single-family mortgage bonds and airport revenue bonds. Taxable deals were up 13%, to $3.78 billion from $3.35 billion.
General obligation issues soared 55%, to $69.89 billion from $45.19 billion last year. Revenue bond sales were up 38%, to $121.61 billion from $88.36 billion.
The use of bond insurance to enhance municipals continued to climb, rising 59% to $64.25 billion from $40.53 billion. Bonds secured by insured mortgage or collateralized by mortgage securities rose 4%, to $4.08 billion. Bonds backed by bank letters of credit dropped 17%, to $5.71 billion, despite a 21% jump in variable-rate financing, to $11.32 billion.
State government issues rose 31%, to $21.68 billion, and state agency sales jumped 49%, to $52.75 billion. Bonds sold by local municipalities rose 49%, to $83.19 billion, and local authority sales posted a 34% increase, to $30.75 billion. Bonds sold by public universities and colleges rose 11%, to $3.14 billion.
California issuers were the most active, bringing $22.46 billion to market, up 12% from $20.09 billion the year before. New York was second, with a 17% increase to $ 17.45 billion; followed by Texas, up 58% to $14.15 billion; Florida, up 47% to $11.01 billion; and Pennsylvania, up 33% to $10.19 billion.
Securities Data's figures are preliminary and subject to substantial revision. September's bond volume, for example, was revised to $19.07 billion, up $880 million from the $18.19 billion reported in the Oct. 26 quarterly supplement.