31 de diciembre de 2014 / 17:38 / en 3 años

Twist ending: U.S. municipal bond sales in 2014 to surpass 2013

WASHINGTON, Dec 31 (Reuters) - Sales of new U.S. municipal bonds in 2014 will exceed 2013’s total, Thomson Reuters data showed on Wednesday, a twist ending to a year that began with shrinking supply.

Preliminary data shows issuance for 2014 was likely $314.95 billion, 1 percent more than the $311.86 billion sold in 2013. The increase was from refinancing, with refunding bonds rising 11.5 percent to $180.44 billion, as well as large deals. The number of deals in 2014, 10,156, was down from 10,563 in 2013.

The rise also was fueled by a late-year issuance surge to take advantage of low interest rates. December marked the largest month of issuance, $35.96 billion, in 2014. That was the biggest monthly total since June 2012 and the largest for December since 2010, when the Build America Bond program’s expiration inspired a flurry of last-minute deals.

Altogether, $99.32 billion in bonds likely were sold in the fourth quarter of 2014, the largest quarterly total since the second quarter of 2012, when a refinancing wave crested and brought quarterly issuance up to $113.35 billion. The total for the fourth quarter of 2013 was $73.36 billion.

The issuance is a sharp reversal from the first half of the year. By June, municipal bond sales were 25.4 percent behind 2013 levels. Puerto Rico’s $3.5 billion sale in March, underwritten by Barclays Capital, was one bright spot and also the single largest deal of 2014, according to Thomson Reuters data.

Interest rates on long-term bonds subsequently plunged, enticing borrowers back to the market.

As of Tuesday, the yield for a top-rated 30-year bond had fallen 132 basis points since the first trading day of the year, to 2.88 percent on the benchmark scale from Municipal Market Data, a unit of Thomson Reuters.

In September, California brought the second-largest deal of 2014 to market, $2.37 billion general obligation bonds with Wells Fargo & Co. and Bank of America Merrill Lynch as lead underwriters. The third-largest sale of the year, New York City’s $2.04 billion of sales tax bonds, underwritten by J.P. Morgan Securities, quickly followed.

Bank of America underwrote the most debt in 2014, $44.78 billion, Thomson Reuters data shows. J.P. Morgan came in second, followed by Citi, Morgan Stanley and Wells Fargo. The positions were almost identical to those in 2013, except for Wells Fargo, which was the seventh-largest underwriter in 2013.

Reporting by Lisa Lambert; Editing by Dan Grebler

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