Far West Volume: Up Nearly 4% in 2013
February 27, 2014 8:26 PM
New Money Issuance Drives Slight Uptick in Far West Volume
Sales of municipal bonds in the Far West region in 2013 bucked the national decline with a slight 3.5% increase, rising to $67.6 billion, spurred by new money sales as state and local economies began to recover. Los Angeles Department of Water & Power was the region's seventh-largest issuer with more than $1.5 billion. LADWP workers install solar panels at the now operational Adelanto Solar Plant, 65 miles north of Los Angeles in the Mojave Desert.
New Money Issuance Outpaced Refundings in Far West
New money deals in the Far West Region grew by 40.6% to $29.6 billion last year over 2012 while refundings fell 5.6% to $25.7 billion. As the state and local governments and school districts began to recover, we started to see an uptick in their new money issuance, said Michael Johnson, managing partner, co-CIO and head of research Gurtin Fixed Income Management, LLC.
California Continues to Lead Far West in Bond Sales
Issuers in California, the nations most populous state, led the region in issuance with $49 billion in bond sales in 2013, up by 15.4% over the prior year. New money issuance grew by 55.5% while refundings grew by 13.6% in the state. The regions largest sale was a $5.5 billion California sale that priced on Aug. 15. The growth in California state GO issuance from the prior years total of $5.6 billion was primarily new money.
California Governor Still Reining in Debt Issuance
California Gov. Jerry Brown has been much more keen to spend bond proceeds that already have been raised before going to market to sell new bonds, according to Tom Dresslar, a spokesman for the state treasurers office. Brown pushed state agencies to use up bond proceeds from previous sales before issuing new debt. In December 2010, according to Dresslar, the state had $13.9 billion of unspent GO bond proceeds. At the end of October 2013, that number had been reduced to $3.5 billion.
California Sold $8.7 Billion in GOs in 2013
California Treasurer Bill Lockyer said during The Bond Buyers California public finance conference in September that the state planned to sell $12.5 billion in debt over the next 18 months as the states economic recovery helped reduce its relative borrowing costs to the lowest level in five years. The state hasnt set an amount for its GO sale March 12-13, but Bank of America Merrill Lynch and RBC have been selected as joint senior managers.
Foothill /Eastern $2.3B Refinancing Third Largest Far West Deal
The $2.3 billion refunding of Foothill/Eastern Transportation Corridor Agency debt that priced in December was the third largest deal in the Far West region during 2013. The massive debt restructuring that involved five bond series pushed payoff of the debt out 13 years to 2053.
UC Regents Had Regions Second Largest Sale
Regents of the University of California snagged the No. 2 slot on a list of the Far Wests largest issuers, selling $4.7 billion including a $2.4 billion deal on Sept. 26. Proceeds went toward refunding all outstanding lease revenue bonds, which were originally issued for capital projects throughout the university system.
Washington Retains Second Slot in Bond Sales
Muni issuance volume from Washington was down 35.5% decline from 2012 down to $8.3 billion, but it remains the state with the second highest volume in the Far West. The Washington state government was the region's third-largest issuer, selling more than $2.9 billion of bonds
