DALLAS -- With a record $9.7 billion of bonds sold in the first six months of the year, Texas issuance may well be on the way to matching last year's second-best ever volume of $17.1 billion.

Bond dealers say competition is brisk because Wall Street and out-of-state regional firms have flocked to Texas to bid for business in the wake of the state's economic rebound.

"Every dog and his uncle is here now and it shows," said an executive at a Wall Street firm that has long bid in the Texas market. "Everyone is going after the same deals."

Even though many say the number of firms with a Texas presence has increased, the number bidding for deals is actually at or below historical levels.

So far this year, 52 firms have worked as senior manager on Texas deals. compared to 67 for all of last year, according to Securities Data Co. At the same time, statistics show 86 firms have worked as co-managers, compared to 111 for all of 1992.

Even with the increased number of firms with Texas offices, the rankings of top underwriters look much the same.

Goldman, Sachs & Co. was the top senior manager in Texas in the first half of 1993, with 21 issues totaling $1.2 billion. Following closely was Merrill Lynch & Co., with $1.066 billion in bookrunning assignments.

PaineWebber Inc. was the leading co-manager, with $3.6 billion of deals. barely edging out the next three firms, according to Securities Data Co.

The financial advisers rankings continued to be dominated by First Southwest Co. of Dallas, which acted as adviser on 202 deals totaling $2.67 billion -- more than the next four ranked competitors combined.

Fulbright & Jaworski in Houston was again ranked as the state's top bond counsel, with 203 deals totaling $3.04 billion during the first half of this year.

Even though bond dealers say competition has been brisk -- especially for larger deals -- statistics show that average gross spreads for all deals have risen so far this year to $8.49 per $1,000 of par value of bonds. By comparison, the average for all of last year was $7.89 per $1000 par value.

The spread on negotiated underwritings was virtually unchanged from a year ago, with the cost of issuance dropping slightly to $8.46 from $8.65 in 1992. Spreads on competitive deals rose sharply to $11.79 from $3.88, according to Securities Data.

Market watchers believe the nearly three-fold rise in competitive spreads and an increase in overall costs of issuance are partly attributable to a volume of nearly $900 million of municipal utility and other special district offerings.

Those unrated deals traditionally carry spreads that range from $15 per $1,000 of bonds to the mid-$20s. Riskier credits usually incur larger gross underwriting spreads because paid participants on such offerings seek more compensation for the risk and work.

Tom Cassell, vice president at Juran & Moody in Houston, a firm specializing in such bonds, said the heavy refunding activity that began last year will probably be replaced by lower levels of new-money issuance. "I think it's going to be pretty quiet." he said.

Bond executives forecast, that volume could top last year. but say they believe issuance could drop back to a level of about $12 billion a year in issuance starting in 1994. Still. the experts were divided over whether continued low interest rates could repeat the drive by Texas governments to refund higher coupon bonds.

So far this year, refundings have accounted for an unusually high 71.5% of all bonds sold in Texas, according to Securities Data.

"The second half is probably not going to be as busy unless interest rates continue their downward trend," said Richard Meister, vice president and manager of the Dallas office of Goldman, Sachs & Co., the state's leading senior manager this year.

Others agreed.

Vince Matrone, senior vice president and manager of public finance at Rauscher Pierce Refsnes Inc. in Dallas, said that many Texas issuers have been picky in watching the market for the right opportunity to refund debt.

"People have begun to get realistic about refundings." Matrone said. "They are willing to take the savings that are there now and not try to outguess the market."

Several underwriters say the third quarter is showing signs of a respite from the heavy issuance that has been the trend so far this year. They note that first-half volume was inflated by nearly $2 billion in new-money and refunding deals by Texas schools pushing to beat the June 1 deadline for lawmakers to impose a new school finance law.

That law was enacted, but is facing a constitutional challenge.

"In talking to other [firms], I'm hearing that the backlog of deals is slowing down." said Tom Masterson, chairman of Masterson Moreland Sauer Whisman Inc. In Houston.

The pace has left some cautious about the second half of the year. "That level has caused us to be apprehensive about the ability to equal it," said Dan Almon, senior vice president and manager of public finance at Southwest Securities Inc. in Dallas.

Still, market observers say they see a positive long-term trend they attribute to the state's economic recovery and rising property values. They say that after economic downturn the Southwest many issuers were forced to delay or curtail infrastructure spending.

Now, said Matrone, "they're going to have to go forward whether they want to or not. "

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