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

miércoles 31 de diciembre de 2014 13:34 GYT

By Lisa Lambert

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.   Continuación...