Fired up by persistently low interest rates, new-issue municipal bond volume grew 42% through the first nine months of 1992, rising to $170.17 billion compared with $119.94 billion in the same period last year, according to preliminary figures compiled by Securities Data Co.
With municipal sales poised to break through the $207 billion record set in 1985, volume highs have already been set in issuing debt for education and transportation, and in refundings and general obligations.
Refundings have accounted for most of the year's increase, jumping to $80.6 billion through September, 144% more than the $33.04 billion rise in the same period last year.
The previous annual high for refundings was $70.77 billion in 1985.
In September, 14 of the 50 largest issues were for refundings, and three others in the group were combined refunding and new-money deals.
Last month's two largest issues were refundings: $550 million of Texas Public Finance Authority general obligation bonds and $541 million of Ohio Water Development Authority water development bonds.
During the third quarter this year, The Bond Buyer's municipal bond index of 20 general obligation bonds averaged 6.18%, reaching 5.89% on July 23, its lowest level since April 27, 1978, when it was also 5.89%. In the 1991 third quarter, the 20-bond index averaged 6.92%, a 74 basis point difference.
Robert Chamberlin, senior vice president of municipal research and marketing at Dean Witter Reynolds Inc., noted "there is ongoing interest in refundings."
"You have issuers who were looking at levels in late July when selling the issue at attractive rates was still feasible," he said. "Now, two months later, those issuers are on the sidelines still looking at the market for levels where deals can be done."
"Of course, if prices continue to deteriorate, there will be a self-correcting effect," Mr. Chamberlin continued. "And it's theoretically possible to have more refundings done than new paper, at least into October."
According to The Bond Buyer's 30-day visible supply, $9.52 billion of bonds is scheduled to be brought to market. Of that amount, $3.83 billion, or 40% of the total, is refundings. And 16 of the refundings, totaling $1.55 billion, are negotiated deals being held on a day-to-day basis.
New money has cooled perceptibly, rising only 3%, to $89.57 billion from $86.9 billion.
Bond financing has risen this year for almost every purpose category. General purpose and multi-purpose issues, the largest category, posted a 43% rise through September, to $45.62 billion from $31.99 billion.
Education, the largest specific purpose for tax-exempt bonding, jumped 45% through the first three quarters, to $29.51 billion from $20.36 billion a year ago. That amount eclipsed the previous high of $27.3 billion, set in 1991.
Transportation bond sales soared to $20.64 billion from $9.59 billion a year ago, an increase of 115%. Bonds sold for roads and highways skyrocketed to $9.83 billion from $3.89 billion last year, a jump of 152%. Airport financing climbed 137%, to $5.21 billion from $2.2 billion.
Utilities rose 45%, to $18.84 billion form $13 billion.
Health-care volume rose 14%, to $16.04 billion; housing was up 22%, to $11.68 billion; electric power jumped 73%, to $11.48 billion; industrial development increased 29%, to $5.6 billion; and environmental facilities rose 14% to $16.04 billion.
Public facilities was the only sector to decline in the first eight months of 1992, declining 4% to $5.48 billion from $5.74 billion.
Negotiated offerings surged 53%, to $133.21 billion from $87.05 billion, its second highest total ever, behind 1985's $165.51 billion. Competitively bid sales rose 15%, to $35.29 billion from $30.68 billion. Private placements fell 24%, to $1.67 billion from $2.2 billion.
Bonds subject to the alternative minimum tax posted a 25% gain, to $10.94 billion from $8.73 billion, because of increases in single-family mortgage bonds and airport revenue bonds. Taxable deals rose 6%, to $3.13 billion from $2.94 billion.
General obligation issues surged 62% to a record $62.35 billion from $41.21 billion last year, and increased their share of the market to 37% from 34%. Revenue bond sales were up 37%, to 107.82 billion from $78.73 billion.
State government issues rose 31%, to $18.74 billion, and state agency sales jumped 51%, to $47.67 billion. Bonds sold by local municipalities rose 48%, to $74.73 billion, and local authority sales posted a 25% increase, to $26.23 billion. Bonds sold by public universities and colleges inched 3% higher, to $2.8 billion.
California issuers continued to be the most active, bringing $18.87 billion to the markets, up 3% from $18.32 billion the year before. New York was second, with a 17% increase to $15.86 billion; followed by Texas, up 57% to $13.03 billion; Florida, up 53% to $10.29 billion; and Pennsylvania, up 29% to $9 billion.
Securities Data's figures are preliminary and subject to substantial revision. August's bond volume for example, was revised to $20.59 billion, up $1.6 billion from the $18.99 billion initially reported.