The municipal market for the month of February continued its upswing in new issuance of long-term bonds from one year earlier.
Primary market volume shot up 44.2% last month from
This year, February witnessed
An extended “January effect” of low primary volume and high demand due to lots of reinvestment cash gave way to more and larger issuance around the middle of last month.
Three deals of
Around this time in 2011, however, the market cut a ragged figure: interest rates were much higher, demand was low, calls for fiscal austerity were deafening, and outflows from muni bond mutual funds continued apace.
For the past month, though, the increase in refundings, up almost 170% last month from the same period one year earlier, caught the attention of
Volume levels for the month approximated those of February in 2008 and 2009. But refundings had a lot to do with the increase this year, he said.
“One of the reasons why we couldn’t do them was, looking at the yields, there was such negative arbitrage there for quite a while — and there’s still is some negative arbitrage,” Ciccarone said.
“But the level of interest rates during the month was so low that it allowed the math to work, that you could do a refunding,” he added.
Among the different muni sectors, utilities and transportation experienced the largest increases in volume.
Utilities issuance leapt 406% for February year-over-year, to
The largest sectors, general purpose and education, had a mixed month. General purpose bond issuance fell 8% from
Overall tax-exempt issuance increased 80% last month over that of a year earlier, at
By comparison, taxable issuance fell 43% in February from a year ago, to
Revenue bonds rose 77% in February over the same period last year, to
Bond-insured volume jumped 53% from
Among municipalities, colleges and universities, cities and towns, and districts saw the largest jumps last month. Colleges and universities were up 222% February-over-February, to
Bond issuance by cities and towns in February rose 204% over the same month a year earlier, to
State governments saw a 68% decline over the period, as issuance collapsed to
Local authorities experienced a 2.1% decline in volume.
For the year to date, muni volume is up about 42%. There’s been
Again, the number of refundings is up significantly so far in 2012. They’ve jumped 160.5%, representing
New-money deals, for their part, have fallen 6.6% through the same period, to
State issuance changed rather dramatically for the first two months of 2012 over the same period one year earlier. A rare
The Golden State followed
Rounding out the top five for 2012,
February saw more of the large issuers emerge from the January effect, according to
“We’re starting to see a pick-up of some of the largest issuers,” she said. “Money is in the market looking for deployment. The large issuers that were quieter last year on the whole, such as
The numbers this past month, however, do not include roughly
James Ramage writes for The Bond Buyer.
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