The pace of transportation debt issuance slowed in the second quarter of the year, after jumping 253.7% in the first quarter over the same period last year.

Transportation volume increased 99.1% during the first half of the year over the first half of 1991 with a total of $12.4 billion of debt sold in 236 issues, according to figures compiled by Securities Data Co./Bond Buyer.

Analysts attributed the surge in volume to low interest rates in the market. Low rates also fueled refundings, which accounted for about a third of the total transportation volume at mid-year. The $4 billion of debt refunded marked an increase of 329.3% over the first half of 1991.

The New Jersey Highway Authority refunded $422.7 million of debt in June - the quarter's largest such issue - in a deal headed by Lazard Freres & Co. The Metropolitan Atlanta Rapid Transit Authority refunded $296 million of bonds in May in a deal headed by Merrill Lynch & Co.

A refunding was also part of the second quarter's largest transportation deal - $606 million of revenue bonds issued by the Puerto Rico Highway and Transportation Authority in June. The issue, priced by a group led by Lehman Brothers, consisted of about $425 million of new debt and about $181 million of refunded debt.

Gary Krellenstein, a senior vice president of research at Lehman Brothers, credited the market's low interest rates with the jump in refundings and for transportation debt in general.

"It's the single biggest factor for the increase in debt across the market," he said.

Leading the pack for overall transportation issuance was debt for streets and highways, which was up 151.5% at midyear, with 120 issues totaling $5.4 billion. Airport financing followed with $3.3 billion of debt issued in the first six months, a jump of 89% over the same period last year.

Timothy Haney, an analyst with Van Kampen Merrit Investment Advisory Corp., said many airlines were taking advantage of the low interest climate in the market to build facilities with airport special facilities tax-exempt bonds.

The largest transportation deal at midyear was $741 million of new debt issued in January by the New Jersey Turnpike Authority in a deal headed by Goldman, Sachs & Co.

State agencies issued $5.4 billion of transportation debt in the first half of 1992, followed by local authorities, which issued $3.5 billion: municipalities, which issued nearly $2.9 billion; and state government, which issued $575 million.

Mark J. Tenenhaus, a first vice president in research at Dean Witter Reynolds Inc., said the higher volume for transportation issues in the first half of the year does not mean that transportation financings are surging across the country.

He pointed out that most of the volume increase was due to the increase in refundings, as well as bonding for specific projects, like the new Denver airport and by large transportation agencies with continuing needs like New York's Metropolitan Transportation Authority and the New Jersey Turnpike Authority.

However, Mr. Tenenhaus said transportation issuance should become more widespread as more governments take advantage of incentives contained in the federal highway bill and as airports begin to collect passenger facility charges.

There were 6.4 times more negotiated transportation deals than competitive deals in the first six months of the year.

Smith Barney, Harris Upham & Co. retained the top spot as book-running manager for transportation issues, handling $2.3 billion of debt during the first half of the year. However, Lehman Brothers was the lead manager on slightly more issues, 23 compared to 20 by Smith Barney, underwriting a total of $1.9 billion of debt. Both firms were in the top three for lead underwriters during the first quarter.

Goldman Sachs, which had ranked second during the first quarter in terms of volume of debt handled, dropped to third for the first half of the year, with nearly $1.7 billion of debt sold in eight issues.

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