New-issue bond volume continued spiraling downward with July issuance plunging 51% to $12.04 billion from $24.77 billion a year ago, according to information from Securities Data Co.'s data base,
Only 453 new issues came to market last month, the lowest monthly total since January 1988 when 404 new deals were sold. In fact, if the $4 billion California revenue anticipation warrants were excluded from last month's total, the $8.04 billion remaining would be the smallest dollar amount in long-term monthly volume since January 1991 when only $7.82 billion of bonds were sold.
Through the first seven months of the year, new long-term issue volume totaled $103.54 billion, down about 41% from $173.9 billion sold in the 1993 January-July period.
The month of July 1994 was plagued by ongoing uncertainties over whether and when the Federal Reserve Board would again tighten its monetary policy to head off inflation and bolster the dollar. For the most part, that kept both issuers and investors out of the market.
However, the lack of desire on both sides of the fence to commit before seeing what action the Fed would take and when did keep municipal bond prices steady last month. The yield on The Bond Buyer's index of 20 general obligation bonds opened the month at 6.28%. The index closed July at 6.22%.
With the prospect of higher rates somewhere on the horizon, newmoney deals have been the only driving force in the primary market. So far this year, new-money issuance rose 24% to $68.55 billion, or 66% of total volume, from $55.1 billion, or 32%.
Refundings continued to plunge. Through July they have fallen 70% to $26.77 billion from $89.98 billion a year ago.
Still, without issuers and reluctant buyers, new-issue volume dropped in every specific use category except for housing and industrial development.
Housing deals rose 24% in July, to $678 million from $547 million in July 1993.
Three of last month's largest issues were housing deals: a $121.2 million Florida Housing Finance Agency single-family issue; a $110 million Virginia Housing Development Authority multifamily sale; and a $80.1 million New Jersey Housing and Mortgage Finance Agency singlefamily deal.
The increase in housing bond volume can also be attributed to the June 1992 expiration of the tax exemption for mortgage revenue bonds. The loss of the tax exemption depressed housing bond sales until September 1993, when the tax exemption was made permanent.
In the first seven months, bonds issued to finance housing projects have increased 15% to $7.89 billion from $6.39 billion.
Bonds sold for industrial development projects almost doubled in July to $901 million from $469 million a year earlier. The gain was so sizable because of a $705 million deal by the New Jersey Economic Development Authority, which was sold on July 15.
The gains posted in the industrial development sector were also due to the small-issue industrial development bond program that expired in July 1992 and was not reinstated until September 1993. Having missed out on most of last year's record-setting refunding period, industrial development has made up for lost time and become one of the few sectors to post any increase in refunding sales this year.
Through July, industrial revenue financing increased 12% to $4.39 billion from $3.91 billion.
Every other specific use component was down last month and is down so far this year. Education, the largest segment, plunged 63% in July to $1.2 billion on 123 deals from $3.25 billion in the year ago period on 346 issues. In the January-July period, education financing is down 30% to $19.35 billion from $27.57 billion.
Electric power issuance, which helped fuel much of 1993's recordbreaking volume surge, cascaded to a nearly non-existent $24 million and four deals in July 1994, from $2.58 billion and 21 sales a year ago. So far this year, electric power deals have dropped 79% to $4.04 billion from $19.39 billion.
Transportation new-issue volume has also taken a steep drop, to $327 million on 22 sales last month from $2.47 billion and 55 issues in the year-earlier period. That's a decline of 87%. Year to date, transportation is down 47% to $9.69 billion from $18.34 billion.
California issuers remain the most active in the municipal bond arena. bringing $16.64 billion of new deals into the market, down 26% from $22.52 billion a year earlier. New York issuers were the second busiest, bringing $11.63 billion to market, compared with $15.56 billion in the 1993 period, a decline of 25%. Texas was third, issuing $6.78 billion, down 38% from $10.87 billion; Pennsylvania fourth with 5.72 billion, a decline of 34% from $8.64 billion; and Florida. was fifth, with issuance dropping 50%, to $5.5 billion from $11.01 billion.
Securities Data's bond volume figures are preliminary and subject to substantial revision. For instance, June's bond volume figures were increased to $15.41 billion from $15.12 billion on July 25, when they were last published in The Bond Buyer.