BRADENTON, Fla. - Municipal bond issuance in the Southeast last year dropped 11% to $56.7 billion from to $63.7 billion in 2012 as rising interest rates knocked out refunding opportunities and new-money volume ticked up only 1.1%.

Slideshow: Southeast Muni Volume Slips in 2013

Factors contributing to the drop in annual volume included 255 fewer transactions than the 1,701 completed the previous year, according to Thomson Reuters.

Southeast 2013 Year in Statistics

The 675 deals sold only for new money totaled $23.7 billion. Sole refundings saw the biggest decline at $21.3 billion, a drop of 27.7%. Combined new money and refundings deals came in at $11.8 billion, up 5.3%.

The $45.6 billion in tax-exempt offerings was down 19%, while deals subject to the alternative minimum tax fell 49.6% on volume of $1.3 billion.

Issuers took advantage of low taxable rates during the year and sold $9.9 billion of those deals, an increase of nearly 98% over 2012.

Bonds issued for development purposes saw volume soar 253% to $3.98 billion. The category got a boost from the Florida Hurricane Catastrophe Fund Finance Corp.'s $2 billion taxable revenue bond deal on April 10. It was the region's single-largest offering.

Public facilities, housing and utilities sectors also saw increases in volume between 10% and 39%. Bonds sold for general purposes, the largest category by volume with $12.24 billion, saw a drop of 20%.

The Southeast can expect to see slow growth in new money volume with gradual increases this year and next, according to David Moore, a managing director at Public Financial Management Inc.

"Early in year, we still saw a good bit of refunding volume but from April on refundings slowed down," Moore said. "We had begun to see clients talking about new projects but the new money just didn't pick up late in the year."

He added, "We expect that to change in 2014 and 2015 but there's a lag in new money issuance as issuers still work out of the slower economy the last couple of years."

It is typical for local governments to take a year or more to crank up issuance coming out of a recession, Moore said, adding, "As they see revenues improve they are conservative and prudent, and wait to see revenues in the next budget before building in new projects."

PFM maintained its year's-long status as the top financial advisor in the region last year, credited by Thomson Reuters with $9.521 billion of par volume, though that was down nearly 34% from 2012. Moore said the firm maintained its top spot by being an independent financial advisor and "providing the same independent fiduciary advice we've been giving for the last 20 or 30 years."

Public Resources Advisory Group maintained second place on the second financial advisory table last year working on $5.4 billion in deals, while First Southwest Co. remained in third place advising on transactions worth $3.75 billion.

Perhaps the big story in the Southeast last year was the culmination of the second-largest municipal bankruptcy in the country's history and a November offering by Jefferson County, Ala., that set two milestones in the region.

The county's $1.79 billion sewer warrant deal was the cornerstone of its exit plan, and it was the Southeast's second-largest sale of the year.

Bond counsel was Birmingham-based Balch & Bingham, and Jefferson County's transaction helped propel it to become the region's third-ranked firm in the sector with $2.43 billion in total volume.

"2013 was a solid year for our public finance practice in general," said Balch & Bingham partner J. Foster Clark. "Jefferson County's refinancing to exit Chapter 9 was a particularly fascinating and professionally rewarding experience for us."

Nabors, Giblin & Nickerson PA was the No. 1-ranked bond counsel with $3.28 billion in transactions, including the Florida Cat Fund's $2 billion taxable deal in April.

Haynsworth Sinkler Boyd PA zipped up to second place, up from ninth the previous year, serving as bond counsel on deals worth $2.9 billion.

Haynsworth was bond counsel to the South Carolina Public Service Authority, known as Santee Cooper, which priced the region's third-largest single sale in August with $1.34 billion of taxable and tax-exempt bonds. Santee Cooper sold a total of $1.85 billion of bonds last year, which made it the Southeast's second largest overall issuer of 2013, behind the Florida Cat Fund.

There were no changes in the top three senior manager's positions. Citi topped the Southeast table with $9.25 billion of volume, Bank of America Merrill Lynch remained in second with $8.4 billion, and JPMorgan retained third place with $5.33 billion, though that was a 41% decrease in volume from 2012.

Issuers in Florida kept the state in top position for muni bond issuance among the region's 11 states with $13.3 billion in volume, though it was a 25.8% year-over-year drop.

Virginia and North Carolina came in second and third for regional issuance. Virginia issuers sold $6.76 billion of debt, down 37.7%, while North Carolina issuers had par volume of $6.36 billion, which was down 3.9% from the prior year.

Georgia dropped to fourth place in 2013, from second place the prior year, selling a total of $5.94 billion in debt, which was a decrease of 10.3%. The gilt-edged state government sold $685 million of taxable and tax-exempt general obligation bonds in June, making it the sixth-largest one-day offering of the year.

Five states saw issuance increase over 2012, including South Carolina's $5.04 billion, an increase of 17.6%.

Kentucky was the biggest percentage gainer, with volume up 78.6% to $4.8 billion, helped by the Kentucky Public Transportation Infrastructure Authority's sale of $727.9 million of bonds and notes on Dec. 12 for the downtown Ohio River Bridges Project. The deal was the fourth-largest offering in the Southeast during 2013.

Alabama also showed an increase in volume by 14.6% to $4.37 billion, which included Jefferson County's $1.785 billion sewer warrant deal.

Louisiana issuers brought $4.35 billion of bonds to market for an increase of 9.7%. West Virginia also boosted its volume by 12.9% with $818 million in sales.

In Tennessee, issuers backed off selling debt by 22.3% on total volume of $3.56 billion. Mississippi was also down by 12.6% on sales of $1.42 billion.

Across the region, those who came to market last year continued to favor negotiated offerings with $37.15 billion, a drop of 18.2%. Competitive deals declined 14.9% to $13.8 billion, while private placements jumped 142% on $5.79 billion of par sold.

Some $41.49 billion of revenue bonds were sold, down 11.6%, while $15.25 billion of GO bonds were marketed, a drop of 10.8% in volume.

Fixed-rate debt was by far the most popular with $50.3 billion, a decrease of 14.4%. The use of variable-rate short put debt declined 46.7% to $1.26 billion while long variable-rate no-put debt was down 18.8% to $459 million. Linked-rate debt increased 86% to $3.9 billion.

The use of letters of credit zoomed to $2.02 billion, a hike of 578%.

The use of bond insurance dropped 18.6% to $1.4 billion on 91 deals.. Bank-qualified debt volume was down 14.3% to $2.06 billion.

Improvement in year-over-year sales were seen by only two classes of issuers: counties and parishes, up 6.2% to $8.9 billion, and direct issuers, up 87.8% to $141.4 million.

State agencies, the largest group of issuers, saw volume decrease by 11.3% to $17 billion, followed by local authorities where issuance dropped 10.6% to $11.8 billion.

Cities and towns, state governments, districts, colleges and universities combined sold $18.8 billion in debt, and each experienced double-digit declines in issuance between 11% and 27%.

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