Municipal bond issuance in the Southeast rebounded in the first half of 2024, with dollar volumes increasing 42.4% over the first half of 2023.

This followed a 29.9% decline in the first half of 2023 compared to the first half of 2022.

According to LSEG data, the increase in bond volumes in the South East in the first half of 2024 compared to the first half of 2023 was better than the national increase of 32.3% over the same period.

“The population in the Southeast continues to grow rapidly, which requires continued public improvements,” said John Hallacy, president of John Hallacy Consulting LLC. “Healthcare, transportation and utilities emissions increased 100% or more year over year. Interest rates have played along this year and remained low. Last year, interest rates stayed high for longer (and) that has held back emissions to some extent.”

Dollar volume in the Southeast was $45.5 billion in the first half of the year, including $18.3 billion in the first quarter and $27.2 billion in the second quarter. The second quarter saw a 57.7% increase over the second quarter of 2023, compared to a national increase of 35.4% in the second quarter.

“The positive development in the second quarter is due to falling interest rates,” Hallacy said. “In addition, ongoing federal aid has now been received for projects and issuers are having to provide a larger portion of their own financing.”

The 45.5 billion dollars in the first half of the year also rose from 33.8 billion US dollars an increase of 34.6% in the second half of 2023.

State by state
The pioneers were issuers in Florida, which sold municipal bonds valued at $12.4 billion, an increase of 83.9 percent over the previous year.

Alabama was in second place with $6.57 billion, an increase of 62.2%, followed by Virginia with $5.33 billion, Georgia with $4.86 billion and Kentucky with $4.3 billion.

Other states with increases of more than 60% compared to the previous year were Kentucky with 217.9%, South Carolina with 208.9% and Tennessee with 60.9%.

On the other hand, West Virginia emissions fell 73.7% to $185 million, Louisiana saw a 60% decline to $1.5 billion, and Mississippi lost 56.6% to $519 million.

Georgia was the other state where volume declined year over year, down 6.4% to $4.9 billion.

The number of emissions in the regions increased by only 6%, from 534 to 566. Of the five states with the largest percentage dollar volume increases, the number of emissions increased moderately in three of them. The exceptions were South Carolina, where the number of emissions decreased from 33 to 31, and Tennessee, where the number of emissions increased from 14 to 32.

Tax-free issuance in the region increased by 43.7% to $37.7 billion.

Taxable issuance fell 20% to $3.8 billion. Bonds subject to the alternative minimum tax more than quadrupled to $3.98 billion, thanks to a $3.1 billion deal with Florida Development Finance Corp. (AMT) in April. private passenger rail transport.

Refinancing volumes in the region rose 65.5% to $7.8 billion, outpacing the US increase of 56.6%. The region recorded $33.7 billion of new money issuance and $4 billion of issuances that LSEG classifies as combined new money and refinancing.

The development of revenue bonds and general obligation bonds also follows this pattern. While the volume of revenue bonds rose by 54.5% in the US, it rose by 62.7% in the Southeast. In the US, the volume of general obligation bonds rose by a modest 3.4%, but in the Southeast it fell by 20%.

The Southeast had $39.2 billion in LSEG class revenue bonds, but only $6.3 billion in GO bonds.

The Southeast’s share of GO bonds at 14% is well below the national share of 34%.

Hallacy explained that the focus in the region in the first half of the year was more on systems with revenue cash flows, such as utilities.

The region saw $35.5 billion in bonds negotiated, $8.9 billion in competitive transactions and $1.1 billion in private placements, the first two up 68.5% and 30.8% respectively compared to the first half of 2023, while the last fell 72.6%.

Industries
The sector with the highest volume was utilities with $12.6 billion, double the previous year’s figure. This figure is due to energy prepayment contracts, which ; four of the region’s eight largest emitters were energy prepaid companies.

The next largest sectors by revenue were education at $7.2 billion, transportation at $6.6 billion and general purposes at $6.1 billion.

The volume of education increased by 25.7%. The number of editions increased from 133 to 156.

In the first half of 2024, issuance by educational institutions accounted for 15.8% of all municipal bonds in the Southeast, compared to a 26.6% share in the U.S. Hallacy said smaller schools are holding back on issuance and some deals are being done outside the municipal market.

The transport volume doubled.

Although the environmental assets sector was the smallest sector overall at $628 million, it saw the largest jump in volume at 206.3%. However, there were only three issues in both the first half of 2023 and the first half of 2024.

Biggest deals
At $3.144 billion, the Brightline deal was the region’s largest in the first half of the year. Morgan Stanley was the lead manager of the April 26 alternative minimum tax bond, which was sold through Florida Development Finance Corp.

The The second largest amount was $2.243 billion. Deal by Jefferson County, Alabama, to redeem the Series 2013 warrants issued as part of the county’s exit from Chapter 9 bankruptcy proceedings. Raymond James and Stifel Nicolaus managed the redemption bond on January 10, after the gave his Market.

Next on the list was a $1.91 billion contract with the South Carolina Jobs Economic Development Authority. managed by JP Morgan and RBC Capital Markets.

The fourth largest bond was a natural gas prepayment from the Kentucky Public Energy Authority on June 18, managed by Morgan Stanley.

The fifth largest bond and the only other bond over $1 billion in the first half of the year was issued by the Florida State Board of Administration Finance Corporation for the to protect building insurance companies from the risk of major hurricanes.

The price of the taxable bond was set on April 18 under the joint management of Morgan Stanley, BofA Securities, JP Morgan and Wells Fargo.

League tables
The largest top managers in the half-year were Morgan Stanley (according to LSEG subscription amount of $7.51 billion), BofA Securities with $7.36 billion, RBC Capital Markets with $5.11 billion, Raymond James with $4.78 billion and JP Morgan with $4.65 billion.

The largest municipal advisor was PFM Financial Advisors with $9.75 billion, followed by Municipal Capital Markets Group with $3.99 billion, Davenport with $2.99 ​​billion, Public Resources Advisory Group with $2.96 billion and Kaufman Hall & Associates with $2.12 billion.

Topping the bond counsel table was Greenberg Traurig with assets of $5.64 billion, followed by Kutak Rock with $5.2 billion, Balch & Bingham with $2.35 billion, Alston & Bird with $2.3 billion and Nabors Giblin & Nickerson with $1.8 billion.

Bond insurance usage increased both compared to the first half of 2023 and as a percentage of all transactions. Insured volume increased 66% year-on-year to $3.6 billion. The share of dollar volume insured increased from 6.8% to 7.9%. The share of transactions insured increased from 7.7% to 9.2%.

The largest issuers of the half year due to the Brightline deal were Florida Development Finance Corp. with $4.4 billion, Main Street Natural Gas with $2.3 billion, Jefferson County with $2.24 billion, the South Carolina Jobs Economic Development Authority with $2.01 billion and the Kentucky Public Energy Authority with $1.76 billion.