"There was a lot of refunding in the second half of the year," said Ajay Thomas of William Blair & Co.

Municipal bond issuance volume in the Northeast was little changed in 2014, rising 1% from 2013 volume as issuers weighed low interest rates against their ongoing fiscal challenges.

The low interest rates did spur bond refundings, which were up almost 29% for 2014, while new money issuance declined 17.6%.

After a first quarter decline of 22% to $19.5 billion, Northeast issuance saw gains in the remaining three quarters, according to data from Thomson Reuters. The region had a 13.4% second quarter gain from the year-earlier period to $23.4 billion. Bond sales then rose 11.5% to $20.98 billion in the third quarter and 5% to $30.5 billion in the fourth quarter.

In 2013, issuance in the region's 11 states, two territories and the District of Columbia was down 17.4% from 2012.

Puerto Rico had the region's largest volume increase at 149% on the strength of a single $3.5 billion general obligation deal in March, the largest sale of high-yield junk bonds in municipal market history. No other bonds were issued by Puerto Rico for the remainder of 2014 as the government battled financial stress and junk-rated credit.

The Puerto Rico deal was the region's largest in 2014 ,followed by a $2 billion New York City Sales Tax Asset Receivable Corp. refunding in September, the New York Liberty Development Corp. with its $1.6 billion unrated Liberty Bond deal in October for 3 World Trade Center, and the Empire State Development Corp. with a $1.3 billion December sale.

Northeast states with the biggest 2014 issuance were New York with $37.4 billion, New Jersey with $11.2 billion, Pennsylvania with $10.8 billion and Massachusetts with $10.1 billion.

Issuance volume in the District of Columbia doubled to $3.07 billion.

Issuance increased in seven of the 11 Northeast states led by Connecticut with 27.8% growth. Vermont had the greatest issuance decline for the year at 39%.

Ajay Thomas, head of public finance at Chicago-based William Blair & Co., said Connecticut's surge in bond sales can be attributed in large part to local governments being better financially positioned to go to market and seeking to take advantage of the low interest rate environment that existed. The Connecticut state government alone issued $3.2 billion last year.

"There was a combination of good fundamentals and a need for infrastructure," said Thomas of the active year Connecticut municipalities had. "There was a lot of refunding in the second half of the year."

Issuance in the Northeast's largest state, New York, was down 8.9% after a 16.5% decline in 2013. The Empire State had a 27.5% year-over-year increase in the second quarter, but was down 22.6% year-over-year for the fourth quarter.

The New York State Dormitory Authority and New York City Transitional Finance Authority were the Northeast's largest issuers in 2014 issuers at $4.2 billion and $3.8 billion, respectively.

"Despite low borrowing costs, some local governments have indicated a reluctance to issue debt because of ongoing fiscal challenges," said Matthew Sweeney, a spokesman for New York State Comptroller Thomas DiNapoli. "Other 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."

Issuance in New York electric power bonds was down 65% to $748 million in 2014 after rising 154.8% the previous year. Jim Tricolli, a managing director in the RBC Capital Markets municipal division, said this steep drop was an artifact stemming from the Long Island Power Authority borrowing $2 billion in 2013.

"LIPA did a lot of borrowing and securitization in 2013 after Hurricane Sandy," said Tricolli. "LIPA moves the needle in New York."

Issuance from New Jersey was down 16.5% in 2014, but picked up in the second half of the year with an 82.7% year-over-year gain in the fourth quarter. The state went to market with $525 million of GO bonds in early December, but overall was very quiet in 2014 due to budget and pension challenges along with Gov. Chris Christie wanting to avoid borrowing in advance of a possible 2016 presidential run, according to Tricolli.

"Some of it is political in nature and some of it is economical," said Tricolli of New Jersey's decline in borrowing.

Pennsylvania's issuance rose a slight 1.6% after a 35% decline in 2013. The Pennsylvania Turnpike Authority issued $1.9 billion followed by the state government at $835 million. While education issuance was down 5.4% nationwide, it was up 10.2% in Pennsylvania, which Public Financial Management managing director Kathy Clupper said is largely due to the state having many school districts that opted to take advantage of borrowing and refunding opportunities while interest rates were low.

Clupper said a 2011 state law requiring voter referendums for school construction projects has cut down on new borrowing.

"It has slowed down new construction and it has slowed down issuance," said Clupper.

Massachusetts volume was up 15% in 2014, posting a 91% year-over-year gain in the third quarter after falling in the first half of the year. The state rolled out a MassDirect Notes program sold throughout the year to retail investors and sold more than $6 million a day on average.

"That program generated great volume in Massachusetts," Tricolli said.

The utilities sector thrived in Massachusetts with issuance rising 218% in contrast to a 15% increase nationally.

Maryland bond sales rose 8% to $7 billion. The state saw 24% increase in housing issuance compared to a 14% national drop in the sector.

Maine's issuance fell 17.7% in 2014 to $986.1 million. Issuance was down 77% year-over-year in the first quarter. Bonds were in the news in Maine as Republican Gov. Paul LePage threatened to block bond sales in a budget battle with legislative Democrats before lifting his objection on March 25.

Virgin Islands issuance was up 95.8% to $351 million. The bulk of that volume came in November when the Virgin Islands Public Finance Authority issued $247.5 million Series 2014C bonds.

Bank of America Merrill Lynch and JPMorgan remained first and second among the region's biggest senior managers by par value. Morgan Stanley replaced Citi in third place. Citi and Barclays finished fourth and fifth, respectively.

The top three bond counsel firms remained unchanged in 2014 with Hawkins Delafield first, Sidley Austin second and Nixon Peabody third. Orrick, Herrington & Sutcliffe moved up to fourth place from the seventh spot in 2013 and Locke Lord Edwards came in fifth after not placing in the top 10 a year ago. Norton Rose Fulbright , which jumped to number four from 20 in 2013 by par value on the strength of larger transactions, did not place in the top 10 Northeast bond counsel firms in 2014.

The financial advisor rankings in the Northeast were again led again by Public Financial Management in first place and Public Resources Advisory Group in second. FirstSouthwest was third, AC Advisory finished fourth, and Acacia Financial Group placed fifth.

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