Issuers in the Northeast sold $54.2 billion of municipal bonds in the first half of 2015, according to Thomson Reuters data, rising 26% compared to the first six months of 2014, shadowing the national trend.
Bond sales, which were up 43.6% across the country in the first six months of the year, jumped 26% in the Northeast. Issuance in the Northeast was up 18% year-over-year in the first quarter and up 33% in the second quarter.
The number of deals was up substantially, to 1,352 from 1,022, as issuers sold $23 billion in the first quarter and $31.2 billion from April through June. The region includes 11 states, the District of Columbia, Puerto Rico and the Virgin Islands.
The Northeast's three biggest issuers in the first half were from the Empire State: the Dormitory Authority of the State of New York with $4.7 billion, the New York City Transitional Finance Authority with $3.3 billion and New York City with $2.3 billion.
The next biggest issuers in the region were Pennsylvania with $2.2 billion, Connecticut with $1.6 billion and Massachusetts with $1.5 billion.
"A lot of the issues in the first half have been refundings driven by low interest rates," said Jim Tricolli, a managing director in the RBC Capital Markets municipal division. "This has been a solid six months for the municipal industry, but there is still a lot of infrastructure that needs to be financed."
The only northeast states with first half issuance declines were New Jersey, which was down 36% year-over-year to $3.4 billion, and Delaware, with an 18% drop. Puerto Rico was limited to just one $246 million issue. The District of Columbia held seven bond sales in the first half and was down 36% from last year.
Pennsylvania issuers sold almost $12.3 billion of debt in the first half, more than doubling their issuance in the first half of 2014. Public Financial Management managing director Kathy Clupper said Pennsylvania's issuance bump was due largely to the state issuing $2.2 billion and busy refunding activity.
There were also 12 healthcare issues highlighted by $455.64 million of Series 2015A health system revenue bonds for the Albert Einstein Healthcare Network.
Massachusetts issued $1.5 billion in general obligation bonds in the first half of the year contributing to a 24.6% increase to more than $5.5 billion for the Bay State compared the same period in 2014.
The Massachusetts Development Finance Agency also came to market with $850.3 million. Tricolli said with a new governor, treasurer and debt manager in Massachusetts this year, future issuance is hard to project.
Connecticut issuance was up more than 9% year-over year to top $3.6 million, landing the Constitution State ahead of more populous New Jersey.
New Jersey's issuance was up 31% year-over-year to $1.5 billion in the first quarter; issuers there sold $1.9 billion in debt in the second quarter, which down by more than half from the second quarter of 2014. Dave Thompson, chief executive officer of Phoenix Advisors in Bordentown, N.J., attributed the stark difference to an uptick in calculated interest rates.
"Interest rates blipped upward in the second quarter and that took a lot of refinancings off the table,' said Thompson. "Last year conditions were more favorable to refinancings."
Thompson also pointed to fiscal struggles New Jersey has encountered on a state level that have contributed to a lack of bond issuance. Moody's Investors Service slashed New Jersey's bond rating to A2 from A1 in April citing the state's budget imbalance and pension funding shortfall.
"The structural difficulties at the state level have a negative impact on the demand for bonds in New Jersey," said Thompson.
Tricolli said New Jersey's volume will be much larger in the second of the year with the New Jersey Turnpike, New Jersey Economic Development Authority and the New Jersey Transportation Trust Fund Authority all scheduled to hit the market.
New York was the region's largest source of issuance with $20.9 billion, up more than 32% from the first half of 2014.
Issuers sold $13 billion in the second quarter for a 70.5% increase compared to a year earlier. Bonds for education-related projects almost tripled to $4.7 billion in the first half with healthcare issues more than doubling to $930 million.
New York State Deputy Comptroller Robert Ward did not pinpoint any major driver for the issuance jump, but said market conditions from interest rate levels and the financial conditions at individual municipalities can often play a role.
"Factors affecting the level of issuance may include debt capacity and/or debt cap limitations, projected capital needs and access to other sources of funding," he said in a statement.
Maryland's volume was up 68% in the first six months of the year at $4.3 billion. The Maryland Health & Higher Education Facilities Authority was the state's largest issuer at $1.02 billion.
Clupper said Maryland's first half increase was driven in large part by the state government's $360 million refunding activity. There was almost $1.3 billion in overall refunding in the Mid-Atlantic state from 22 issues marking a 211% increase from the first half of 2014.
Northern New England showed some considerable volume spikes with Vermont's first half issuance up 906% at $300.8 million, New Hampshire's jumping 198% to $505.7 million and Maine up 82% to $724.8 million.
The University of Vermont issued $186.94 million of general obligation bonds in late June to pace the Green Mountain State's borrowing.
Vermont Deputy State Treasurer Steve Wisloski said UVM's issuance to help pay for new dormitories helped drive volume uptick. He also pointed out that the state issued $118 million in bonds during July 2014 that were not factored into last year's first half statistics.
Bank of America Merrill Lynch remained the top senior manager by par volume in the northeast, credited with more than $10.1 billion.
Citi climbed to second place from fifth. Barclays dropped from second to sixth after climbing five spots a year ago. JPMorgan, Morgan Stanley and RBC Capital Markets achieved the third, fourth and fifth spots, respectively.
Hawkins Delafield & Wood LLP kept its hold as the region's top bond counsel followed by Orrick Herrington & Sutcliffe LLP, which climbed six spots from eighth place in the first half of 2014, and Sidley Austin. Locke Lord and Ballard Spahr placed fourth and fifth, respectively, after not cracking the top 10 a year ago.
Philadelphia-based PFM was the top ranked financial advisor in the northeast, credited with more than $14.3 billion followed by Public Resources Advisory Group, FirstSouthwest and Acacia Financial Group.
