Northeast issuers sold $57.4 billion of municipal bonds in the first half of 2016, a 3% increase from the first six months of 2015, according to Thomson Reuters data.

2016 Midyear Northeast Statistics

Issuance in the Northeast was off 1.6% year-over-year in the first quarter before rising 6.1% in the second quarter. The Midwest, which was up 11%, was the only other region with a first-half volume jump. Bond sales across the nation dipped 1.3% compared to the first six months of 2015.

Though volume was up, there was a 14% drop in the number of first- half deals from 1,403 in 2015 to 1,205 this year.

Northeast Issuers sold $23.2 million in the first quarter and $34.2 million from April through June. The region encompasses 11 states from Maine to Maryland, plus the District of Columbia, Puerto Rico and the Virgin Islands.

New York, Delaware, Vermont, New Jersey, Massachusetts and Connecticut saw increases in bond sales compared to the first half of 2015. Pennsylvania, Rhode Island, Maine, New Hampshire and Maryland all saw drops.

The District of Columbia was credited with 17 deals in the first half of the year for $1.8 billion, up 85.7% compared to the year-ago period. Puerto Rico and the Virgin Islands held no bond transactions in the first half.

New York State's overall first half issuance volume rose to $23.5 billion, led by the New York Transportation Development Corp. selling $2.4 billion in special facilities bonds to overhaul LaGuardia Airport. The same conduit also sold $844 million to refund an American Terminal Airlines terminal project at John F. Kennedy International Airport and was the number one Northeast issuer for the first half of 2016.

Transportation debt issuance in the Empire State was up 279.6% from the year earlier, driven by the two airport deals as well as $2.6 billion sold by the Metropolitan Transportation Authority as part of an expansive capital program and an $850 million transaction from the New York State Thruway Authority for a new Tappan Zee Bridge.

Gov. Andrew Cuomo has made a point of touting the LaGuardia and Tappan Zee projects.

"I think the governor is making a special push to improve infrastructure generally and transportation in particular," said Howard Cure, director of municipal bond research for Evercore Wealth Management. "It also doesn't hurt to have Vice President Biden call LaGuardia a Third World airport."

Massachusetts issuers made the Bay State the region's third busiest, selling $2.6 billion, as first-half volume there increased 26% to $7.3 billion. The Massachusetts Development Finance Agency sold $1.58 billion in debt to rank ninth among the region's issuers.

Massachusetts' neighbor to the south, Connecticut, had a 10% issuance spike to $4 billion. The state government issued $1.3 billion in debt for the first half of the year including a $550 million general obligation bond sale on St. Patrick's Day. The University of Connecticut also sold $342 million in GO bonds to enhance academic and dorm facilities.

New Jersey recorded a 27% increase in first half bond volume paced by $645.3 million in issuance by the New Jersey Education Facilities Authority. New Jersey Department of Treasury spokesman Joseph Perone said the heavy education issuance stems in large part to colleges taking advantage of a lower interest rate environment and proceeding with construction requirements associated with Gov. Chris Christie's higher education funding program.

Dave Thompson, chief executive officer of Phoenix Advisors in Bordentown, N.J., said many local government clients opted for refundings in the first half because of a favorable interest rate climate. Refunding volume in the Garden State was up 56.8%
compared to the year-ago period.

"The first six months have been glorious in the sense of doing refundings," said Thomson. "The money is on the table."

Pennsylvania issuers sold $9.5 billion of debt for the first half of the year, a 25.5% decrease from the Commonwealth's first half 2015 totals. The Keystone State's $988.2 million transaction on June 1 was the Northeast's seventh-largest first half issue. The Pennsylvania Turnpike Commission ranked sixth among Northeast issuers with $1.99 billion of volume.

Public Financial Management managing director Kathy Clupper said Pennsylvania's volume drop is due in large part to timing, because the commonwealth floated two large deals in the first half of 2015 and this year did not bring its second major transaction until July, which will count toward second half stats. Philadelphia also had a more active 2015 first half than this year, Clupper said.

"There was so much activity last year and there was a bit of a lull early this year that should pick up in the second half," said Clupper. "While the numbers are off a bit, Pennsylvania is still a very busy issuance state."

A drop in refunding activity also contributed to Pennsylvania's volume decline, which Clupper attributes to municipalities that took advantage of lower interest rates a year ago in anticipation of a Federal Reserve hike. There were 107 Pennsylvania refunding transactions in the first half this year compared with 204 in 2015.

"There were a lot of refundings last year," she said. "There are only so many refundings you can do."

Maryland's issuance dropped 6.4% for the first half year-over-year. The state government recorded the region's fourth largest single issue of the first half with a $1 billion sale on June 8. Clupper said the state's overall issuance decline stems from giant-sized Maryland Health & Higher Education Facilities Authority and Maryland Department of Transportation deals from the first half of 2015 that boosted that year's numbers.

Bank of America Merrill Lynch kept a hold of its position as the Northeast's top senior manager by par volume, credited by Thomson Reuters with more than $12 billion.

Citi and JPMorgan held the second and third spots, respectively.

Wells Fargo and Morgan Stanley rounded out the top five placing fourth and fifth. RBC Capital Markets fell from fifth place to seventh. Barclays dropped from sixth to outside the top 10.

Hawkins Delafield & Wood LLP retained its spot as the top bond counsel in the Northeast. Sidley Austin and Orrick Herrington & Sutcliffe LLP were second and third, respectively. Mintz Levin moved from seventh place to fourth and Ballard Spahr remained in the fifth spot.

Philadelphia-based PFM remained the region's top financial advisor with $16.1 billion of volume followed by Public Resources Advisory Group, Acacia Financial Group and Frasca and Associates.

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