DALLAS — In contrast to the 10% national decline in municipal bond volume for the first half of 2013, the Southwest region's issuers sold $29.7 billion in bonds, a 3% lift year-over-year, according to data from Thomson Reuters.

Southwest Midyear Review

Issuers in Texas, the largest state in the eight-state region, accounted for more than half the volume bringing the Lone Star State to second place behind California after posting a nearly 1% increase to $16.2 billion.

Arizona, New Mexico and Oklahoma also gained, while Arkansas, Colorado, Kansas and Utah saw volume fall.

"I'm hopeful that we'll see more in the September to December period," said Mark McBryde, executive vice president with Stephens Inc. in Little Rock, Ark. "Activity started picking up in the second quarter, but there's no doubt the deal flow is off."

Oklahoma State Bond Advisor Jim Joseph sees the pace slackening through the rest of 2013 after first-half volume in his state rose 35% to $1.79 billion.

"We had some fairly sizeable issues early in the year that I don't see being repeated," Joseph said.

A surge in interest rates in May and June began to dampen demand for refundings nationally, though the Southwest saw more refundings in the second quarter than the first.

Nationally, $175.6 billion in long-term debt came to market in 6,378 deals compared to $195.4 billion in 6,994 issues through the first half of last year.

In the first half of 2011, Southwest volume saw an 11-year low of $17.8 billion; the following year, 2012, Southwest volume rebounded 60% in the first half of 2012 to $28.7 billion.

This year, volume grew a slight 0.6% year-over-year in the first quarter and 5.1% in the second quarter.

While tax-exempt volume was down slightly to $24.5 billion, taxable issue volume soared nearly 67% to $3.99 billion.

Aiming to capture the low interest rates still available, large issuers continued refunding activity, with volume rising 1.1% to $13.86 billion. New money issues fell 1.4% to $9.56 billion while deals that combined new money and refundings were up 15.9% to more than $6.2 billion.

Officials at Dallas-Fort Worth International Airport, the largest single issuer in the Southwest this year with more than $1 billion of new money and refunding, decided in 2012 to advance its plans for issuing debt to take advantage of lower rates.

DFW will continue its aggressive schedule this week with a $428 million revenue bond refunding led by Citi.

Among single issues, the Arizona Transportation Board took the top spot with a $715.5 million deal Jan. 16 led by JPMorgan Securities and Wells Fargo and Co.

Denver Public Schools ranked second with a $537 million deal April 17 negotiated through RBC Capital Markets and Stifel Nicolaus.

DFW's $450 million issue through Morgan Stanley on May 16 ranked third among individual deals, followed by Houston Community College District's $398.8 million through JPMorgan on Feb. 26 and San Antonio's $375 million combined utility issue through Citi on June 27.

RBC Capital Markets ranked first among senior managers with $3.39 billion from 120 issues. RBC edged JPMorgan by about $100,000 in total volume, with both companies claiming 12% of the Southwest market. JPMorgan achieved second place with 34 deals compared to RBC's 120.

Rounding out the top 5 among senior managers were Citi with $2.2 billion on 29 deals, Bank of America Merrill Lynch with $2.1 billion on 24 deals, and Wells Fargo & Co. with $1.66 billion from 22 deals.

First Southwest Co., the perennial leader among financial advisors in the Southwest, claimed nearly 25% of that market for the first half of the year, working on 239 deals valued at $5.85 billion.

RBC Capital Markets came in second with 13% of the market from 97 transactions worth $3.1 billion.

Public Financial Management Inc. took third with 23 deals valued at $1.47 billion, followed by BOSC Inc.'s $1.24 billion on 45 deals and Estrada Hinojosa & Co.'s $1.2 billion in 27 deals.

Norton Rose Fulbright, the law firm created by the merger of Norton Rose and Fulbright & Jaworski in June, claimed the top spot among bond counsel with deals worth $3.89 billion and 13.7% of the market.

McCall Parkhurst & Horton ranked second among bond counsel with $3.62 billion and 12.8% of the Southwest market. Bracewell & Giuliani had $2.78 billion, followed by Squire Sanders with $2.067 billion and Kutak Rock with $2.07 billion.

Among the states, Arizona matched its economic comeback with a 20% gain in bond volume to $4.18 billion from all issuers in the state. The top deal from the Arizona Transportation Board helped transportation issues soar nearly eightfold in volume year-over-year to $1.34 billion. Health care was another big gainer, with a 257% increase to $275 million. Taxable issues rose 95%, while tax-exempts were up 3.6%.

Arkansas issuance volume dropped 18% from the first half of 2012. Volume fell to $1.05 billion in 102 issues from $1.29 billion in 157 issues last year. New money issues were up 67% to $388 million from $232.4 million, but refundings continued to dominate with $74.2 million despite a 25% swoon. Combined issues totaled $91.6 million. The University of Arkansas Board of Trustees was the largest issuer with a $221.3 million sale of revenue bonds in April.

Colorado's volume was also down 18%, to $3.1 billion. After a quiet year in 2012, transportation issues made a comeback, rising to $579 million from only $13 million in the same period last year. Tax-exempt issues were down 28.2% to $2.33 billion, while taxable rose 38% to $787 million.

Kansas activity dipped 7% to $1.27 billion. The bright spot among the sectors was general purpose bonds, with a healthy 34% increase to $490.4 million from $365 million in 2012. Transportation bond issues were up 38% to $55.4 million from $40 million last year. Kansas education issues were down to $444 million from $606 million over the same period last year, while health care debt sales fell to $37 million from $165 million in 2012. The largest issue in the first six months of 2013 was a $146 million refunding by the city of Burlington.

New Mexico was much more active in the first half of 2013 than a year earlier.

Total volume from all issuers in the first half of the year rose 146% to $1.14 billion. State agencies marked a 440% increase in volume to $347 million. The state saw a 154% increase in general obligation debt, compared to a 139% increase in revenue bonds.

Oklahoma issues surged 35% to $1.79 billion from $1.32 billion in the first half of 2012. The general purpose sector grew to $278 million from $105 million last year and utility issues climbed to $337.5 million from $189 million.

New money issues took the lead in Oklahoma, with 231 issues totaling $1.04 billion. Refundings totaled $367 million, with $380 million of combined issues.

In Texas, volume surpassed every state but California. With the Texas Legislature in session, the state did not issue any groundbreaking deals in the first half of the year. Transportation issues were down 28% in the first half of the year compared to first-half 2012 despite the large series from DFW International. However, that should change in the second half.

A $2.8 billion issue for the Grand Parkway toll road around Houston in July ranked as one of the largest in the state's history. That single deal is about $1 billion more than the $1.8 billion issued for transportation in the entire first half of the year.

Utah issuers, by contrast, didn't break the $1 billion mark, with volume falling 10% to $889 million. Issues for electric power more than doubled to $300 million, while housing soared 760% to $250 million.

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