CHICAGO - A flood of refundings by Midwest issuers looking to shed auction-rate securities and variable-rate bonds backed by downgraded insurers offset a nearly 20% drop in new-money borrowing to result in an 8.9% increase in issuance in the region for the first half of 2008.

Midwestern issuers sold a total of $13.5 billion of bonds in 871 deals in the first quarter - a 20% drop over the same period a year earlier. But volume surged to $24.1 billion in 1,222 transactions in the second quarter - a 37% increase over the same period in 2007. As a result, total volume in the Midwest in the first half was $37.5 billion, up from 34.5 billion.

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