BRADENTON, Fla. - Issuers in the Southeast sold $41.56 billion of municipal bonds in the first half of 2015, an 85% increase in year-over-year volume fueled by refundings and a slight uptick in new capital financing.

Click for Southeast Midyear Review

The increase in volume for the Southeast was the largest of any region, according to data from Thomson Reuters.

The dramatic spike indicates that issuers are taking advantage of low rates for budget or pent-up capital needs, which likely will continue if not abated by upcoming elections and federal budget reductions, bankers said.

Bonds issued solely to refund prior deals totaled $20.68 billion, more than double the volume of the same period in 2014. Combined new money and refundings were $7.68 billion, a 182.2% increase.

New money transactions rose 30% with $13.2 billion in sales compared to $10.14 billion the prior year.

Some 956 bond issues came to market in the first half, compared to 601 the prior year. Sales volume was $20.64 billion in the first quarter and $20.9 billion in the second quarter.

All 11 states in the region saw an increase in volume, as did top senior managers.

Citi led book-running firms, credited by Thomson Reuters with $8.4 billion in sales, up from third place with $2.39 billion last year.

Bank of America Merrill Lynch came in second, credited with $3.78 billion.

Wells Fargo Securities jumped to third place with $3.64 billion, up from sixth place last year.

Raymond James and Associates Inc. was ranked sixth among senior managers with $2.69 billion in sales in the first half, up from $1.69 billion the prior year.

"We've had a very healthy calendar and it certainly has included needs that municipalities are now willing to finance," said Jonathan Nordstrom, municipal bond manager for Raymond James and Associates Inc. "Our calendar remains healthy for the balance of the year."

Nordstrom attributed much of the rise in sales to Raymond James' merger with Morgan Keegan & Co. several years ago.

"I think in the Southeast what is interesting for us is that we have many young bankers in this area of the country building a business of prospective new clients," he said.

While some issuers are financing new projects, others continue to be affected by lower sales tax revenues and oil prices as well as pension obligations that could drive what projects they pursue this year, said Nordstrom and bond underwriting department manager Casy O'Brien.

"I think the evolving story on credit in general is going to dictate issuance," O'Brien said.

JPMorgan and Morgan Stanley ranked fourth and fifth, respectively, among the region's underwriters.

The use of bond insurance rose by 145% on $1.7 billion in sales, with 121 deals carrying insurance, up from 49 the year before. Despite the growth, insured bonds only represented a little more than 4% of the region's volume.

Tax-exempt bond volume rose 87.8% to $37.8 billion, while taxable transactions totaled $2.25 billion, an increase of 56%.

Deals subject to the alternative minimum tax increased by 65% to $1.48 billion.

The use of fixed-rate debt was up 91% to $39. 8 billion. Variable-rate, short-put deals dropped by 15.8% to $705 million. Variable-rate, long bonds with no puts totaled $156 million, a 60% increase.

The use of guaranties rose 158.8% to $2.24 billion.

Linked-rate bond sales increased by 40.6% to $897.9 million. Convertible bonds dropped by 90.6% to $4.2 million.

Issuers preferred selling by negotiation bringing 556 such deals totaling $27.26 billion, a volume increase of 131.5% over the first half of 2014. Competitive offerings increased by 51% to $12.06 billion, with 333 competitive deals, up from 229 a year earlier.

Private placements were down by nearly 18% to $2.2 billion.

Southeast issuers sold $11.48 billion for education, up 113%. Bonds for general purposes represented $10.5 billion in sales, a 75% increase over the prior year. Issuance for utilities was up 183% to more than $5 billion.

Deals to finance transportation increased by 14.7% to $4.77 billion. Issuance for healthcare increased by 241.4% to $3.64 billion.

Issuance out of Florida was the region's highest at $12.33 billion, up 87.3 % over 2014.

Sales from the Sunshine state were bolstered by just over $2 billion in transactions from Miami-Dade County, the region's top issuer. Florida Citizens Property Insurance Corp. sold $1 billion of bonds, making it the region's fifth-largest issuer. The Florida State Board of Education sold $977.9 million.

Georgia issuers had the region's second-highest volume with $4.9 billion in 71 deals for a 59% increase.

Atlanta sold $1.49 billion of bonds to become the region's second-highest overall issuer, while the state of Georgia was close behind as the Southeast's third-biggest issuer with $1.28 billion in sales in a single deal that was the largest in the region during the first half.

Virginia issuers sold $4.7 billion of bonds, up 51% year-over-year. Transactions included $763.8 million in bonds issued by the Virginia College Building Authority.

South Carolina sales went up 90% to $3.62 billion. Volume was aided by $1.1 billion in bonds issued by the South Carolina Public Service Authority in February making it the largest issuer in the state and fourth-largest in the region.

North Carolina issuers sold $3.53 billion for a 98% spike in volume. Deals included three transactions from state issuers such as $264.9 million for mass transportation, $231.4 for general improvements, and $100 million for road projects.

In Louisiana, issuers sold $2.8 billion to increase volume by 50.7%. Transactions included a $565.3 million deal by the New Orleans Aviation Board to finance a new, 688,000-square-foot terminal with 30 gates at Louis Armstrong New Orleans International Airport as well as a 2,000-space parking garage and related facilities.

In Kentucky, volume rose by 45.3% to $2.4 billion. The largest transactions included $384 million issued by the Kentucky State Property & Building Commission, $259 million sold by the University of Kentucky, and $210.6 million issued by the Kentucky Municipal Power Agency.

Four states that typically see low volume of sales each year saw issuance rise by triple-digit percentages.

Sales in Tennessee rose by 136.8% to $2.93 billion. In Alabama, issuance increased 243% to $2.38 billion.

Mississippi saw volume increase by 336.6% to $1.35 billion. West Virginia issuance spiked by 138% to $542 million in sales.

Public Financial Management Inc. remained the top financial advisory firm on the Southeast chart, credited with $8.19 billion in sales, up from $4.3 billion in 2014. FirstSouthwest Co. came in second place with $3.66 billion, up from $1.5 billion in third place the year before. Public Resources Advisory Group came in third with $3.32 billion.

Greenberg Traurig LLP topped the bond counsel chart with $2.95 billion in sales, up from 10th place and $698 million in 2014. McGuireWoods LLP came in second with $1.76 billion in sales, up from sixth the previous year. Nabors Giblin & Nickerson PA came in third with $1.72 billion in sales.



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