Housing and development were growth sectors in the 2013 bond market as others fell sharply through most of the year.
Total long-term volume in 2013 dropped 12.5%, to $334.6 billion in 11,435 deals, against $382.4 billion in 13,129 issues in 2012, according to data from Thomson Reuters.
The decline was driven largely by a drop in refundings amid rising interest rates, according to most accounts.
Housing bonds bucked the trend, growing 29.8% to $14.1 billion from $10.9 billion in 2012.
Additionally, development grew 8.1% to $12.2 billion from $11.3 billion the previous year.
Housing volume was the largest since 2008, when $18 billion was issued, but less than half of the 2006 peak of $30.8 billion.
Otherwise, all sectors were down, with utilities taking the biggest plunge, at 27.6%, to $32.97 billion from $45.51 billion in 2012.
"The second half of the 2013 saw strong demand for lower-rated issuance," said Matt Posner, director at Municipal Market Advisors.
"There was more of an interest from investors for yield, and a lot of housing and development bonds tend to be lower rated."
John Miller, co-head of fixed-income with Tony Rodriguez at Nuveen Asset Management, bought up the so-called "dirt bonds," backed by future assessments on land under development, through most of 2013.
"We continue to see increasing development activity and rising valuations of the land in these districts," Miller wrote in a recent report to investors. "As a result, value-to-lien ratios are generally rising."
The state housing finance agencies have regained their stability after a rocky post-recession ride, according to credit analysts.
Since 2010, Standard & Poor's has taken 14 positive and no negative rating actions on the 47 single-family dwelling HFA bond programs, the agency said in a December report. That contrasts with one positive rating action and 16 negative rating actions during the 18 months before 2010.
Standard & Poor's upgraded the California Housing and Finance Agency's home mortgage revenue bond program to A-minus with a stable outlook from BBB with a stable outlook on Dec. 12, 2013, where the agency's rating had stood since May 13, 2011.
In other sectors, education, which represents the largest volume of issuance, fell 3.2% to $90.7 billion from $93.7 billion in 2012. The total number of issues, 4,459, was 584 fewer than the previous year.
The largest education bond offering in the first half of 2013 was the $2.47 billion California state GO deal in March, followed by the $2.25 billion offering issued in January by the New Jersey Economic Development Authority, and the University of California's $1.6 billion sale in March.
Colleges and universities compensated for some of the fall-off in education funding with a 21.7% increase in issuance to $13.8 billion over 201 deals, compared to $11.3 billion over 250 financings in 2012.
In addition to spending on dormitories and classrooms, universities invested heavily in stadium expansions throughout 2013.
The largest such project was Texas A&M University's major remodel of Kyle Stadium, financed by a $453 million bond sale.
Volume in health care, the fifth-largest sector, fell 23%, despite some large deals and mergers designed to make the major networks more competitive under the Affordable Care Act.
Health care issuers provided the market with $28.8 billion of long-term bonds, declining from a total of $37.3 billion in 2012.
In one of the largest healthcare deals, Denver-based Catholic Health Initiatives issued $1.2 billion of taxable and tax-exempt bonds in a complex, multi-state issue in October.
Catholic Health also made its first inroads into Texas, acquiring the St. Lukes Health Care System in Houston in a $2 billion merger.
Transportation volume fell 3.6% to $53.4 billion, even with a $2.9 billion deal from the Grand Parkway Transportation Corporation in July.
The Grand Parkway deal financed an outer loop around the Houston metro area and was set up by the Texas Department of Transportation, which created GPTC and manages it.
The state of California was responsible for the two largest transportation issues in the first half of the year, with a $2.63 billion offering in April, and a $2.47 million deal in March.
General purpose bonds, the second-largest sector, saw volume fall nearly 21% to $79.8 billion from $100.8 billion in 2012.
Public facilities volume fell more than 16% to $8.4 billion over 559 deals. In 2012, there were 589 deals totaling $10.1 billion.
Electric power saw a 19% decline, despite shifting investments into more natural gas power plants by major utilities.
With 164 issues, bond volume totaled $11.8 billion in 2013, compared to $14.6 billion over 197 issues in the previous year.
Across all utilities, volume recorded an even steeper fall of nearly 28% to $32.97 billion from $45.5 billion in 2012.
Additionally, there were 400 fewer transactions for utility bonds than in the previous year.
Jefferson County, Ala., had the largest utility bond issuance in 2013 with its $1.79 billion offering in November. The New York City Municipal Water Finance Authority had four appearances on the top 10, with the second, fourth, seventh, and ninth largest utility offerings.
