Surging new-issue municipal bond sales were fed by relentless refunding volume and rose to a new record for the first seven months of 1993, rising 29% to $169.99 billion from $131.62 billion during the same period a year ago, according to preliminary volume figures obtained from Securities Data Co.'s database.
Volume in the month of July, despite a potent 24% increase to $21.98 billion from $17.76 billion, did not set a record for new-issue sales in the month. July volume trailed the record set in 1986 of $24.89 billion.
Also, the number of long-term bond issues in a month fell to its lowest total of the year, to only 760, following June's highest for 1993 of 1,346.
Through July, refundings maintained their torrential pace, rising 70% to $111.68 billion, staying at 66% of total new issues, from $65.53 billion, or 50% in the year-ago period.
For all of 1992, a record-setting year for refunding volume, $122.21 billion was sold.
In July, refundings rose at a more modest but still sizzling 40% to $13.87 billion, or 63% of the market, from $9.88 billion or 56% in July 1992. In June, refundings made up 60% of bond sales.
New money deals, on the other hand, continue to drag behind levels reported a year ago, falling 12% to $58.3 billion from $66.09 billion. However, those issues did manage to post a slight increase last month, rising 3% to $8.12 billion from $7.88 billion in July 1992.
"State and local governments are strapped for cash," said George Friedlander, managing director of portfolio strategy with Smith Barney, Harris Upham & Co. "Along with slow economic growth, they've been able to push back some projects that aren't urgent."
Even though new-issue deals by state governments and municipalities posted double-digit increases in the first seven months, the gains were half those put up by state and local agencies and authorities.
Both municipalities and states' new issuance increased 18% through July 31, to $66.23 billion and $17.84 billion, respectively, from $$56.15 billion and $15.09 billion.
However, compared with state agencies, whose new sales jumped 38% to $49.77 billion, and local authorities, whose deals soared 52% to $33.52 billion, states and local governments were lagging far behind.
In addition, revenue bond issuance was up 35% to $112.53 billion from $83.30 billion, while general obligation bond deals rose 19% to $57.46 billion from $48.32 billion.
Most of the individual sectors continued rising at healthy rates, with only two sectors - housing and industrial development - showing declines from year ago levels.
Municipal bonds issued to finance housing plunged 40% to $6.35 billion from $10.65 billion in the year ago period, led by a 66% plummet in single-family housing to $2.7 billion from $7.96 billion in the 1992 period.
Vincent Barberio, senior vice president with Fitch Investors Services, attributed the steep drop to the sunset of tax exemption for mortgage revenue bonds on June 30, 1992.
"Everyone rushed their deals to the market to beat that deadline, and since then there's just been very little activity," he said. "Multifamily deals, on the other hand. have done as well as they have primarily because of the positive refunding atmosphere."
Commenting on overall volume, Robert Chamberlin, senior vice president of municipal research and marketing at Dean Witter Reynolds Inc., said "There's a clear pattern in June and July that there are fewer issuers selling those large refunding deals.
"Even though refundings in July were higher as a percentage than June, we're getting to the last gasp for refundings, barring a new breakthrough in prices, which the market right now is saying it's not going to get," he said. "July could be significant as an omen to the future."
Among the other categories, education, the largest specific purpose category, rose 11% to $26.8 billion from $24.21 billion; electric power continued growing at twice the rate of a year ago, jumping 126%, to $19.75 billion from $8.75 billion; utilities jumped 56%, to $20.92 billion; transportation rose 18%, to $17.59 billion; health care increased 46%, to $17.94 billion; public facilities soared 80%, to $8.52 billion; and environmental facilities climbed 26%, to $5.07 billion.
Securities Data's bond volume figures are preliminary and subject to substantial revision. For instance, June's bond volume figures were increased to $30.48 billion from $29.61 billion when they were last published in The Bond Buyer on July 26.
