Northeast volume fell 11% in 2022 as issuers took wait-and-see attitude

Volume in the Northeast fell 11.3% last year as issuers sold $102.3 billion of municipal bonds in 1,520 deals compared to $115.4 billion in 2,283 deals in 2021.

The region still beat the national numbers, which saw municipal bond issuance fall 19.5% to $389.1 billion.

In the Northeast in 2022, tax-exempt issuance dropped 3.4% to $84.4 billion in 1,362 issues last year from $87.4 billion in 1,917 deals in 2021 while taxable deals plunged 51.5% to $11.3 billion in 128 issues from $23.3 billion in 330 issues in the previous year.

Timing was everything, said John Hallacy, founder of John Hallacy Consulting LLC.

“The large taxable refunding or combined transactions were accomplished earlier in the year when rates were relatively low,” Hallacy told The Bond Buyer. “As the Fed hiked rates these transactions declined precipitously.”

Refundings in the Northeast dropped 59.4% to $7.4 billion in 2022 from $18.3 billion the year before while new-money issuance inched up 0.8% to $90.1 billion in 1,372 deals from $89.4 billion in 1,735 deals; combined refunding/new money issuance fell 37.6% to $4.7 billion in 17 deals from $7.6 billion in 65 deals in 2021.

Hallacy noted that some of the largest transactions for the year were in transportation, higher education and state general obligations.

“Some deals were done with very narrow projects in mind such as recovery from wildfires and hurricanes,” he said. “Projects that were done had very solid rationales. Any projects that could be delayed or deferred were.”

Transportation issuance was only down 1.6% in the Northeast to $24 billion.

“Some regions took advantage of the periods of lower traffic to get essential projects done in the transportation sector,” Hallacy said, “but most are awaiting the new levels of federal funding that have become available through the infrastructure act.”

New York not only topped the Northeast as usual as a source of municipal bonds, but also led the entire country.

Issuers in the Empire State sold $49.4 billion of bonds, up 2.3% from 2021.

New York not only bucked the national trend with higher volume, it did so with 531 transactions, down from
777 deals sold in 2021.

Some heavyweight issuers sold large deals in 2022 to lift the Empire State’s numbers.

The biggest issuer in the entire nation last year was the New York City Transitional Finance Authority, which sold $7.5 billion of debt in 19 issues.

It was followed by the New York Triborough Bridge and Tunnel Authority, second in the Northeast and the nation, credited by Refinitiv with selling $6.8 billion of bonds in 12 deals.

Third in the Northeast issuer table was the state of Massachusetts, which issued $5.7 billion in eight deals, followed by the Dormitory Authority of the State of New York, which sold $5.6 billion in 16 deals, and New York City, which sold $5.1 billion in 11 deals.

The Northeast’s single biggest deal in 2022 was DASNY’s $3.09 billion sale of taxable general obligation bonds, priced by Siebert Williams Shank on March 15.    

Coming in second was Massachusetts’ $2.681 billion of taxable social bonds priced by Jefferies on Aug. 16.

The deal to repay federal unemployment insurance debt the state accrued during the COVID-19 pandemic was the largest-ever social bond deal in the municipal market and won the Bond Buyer’s ESG/Green Financing Deal of the Year award in December.

Coming in third was the New York State Thruway Authority’s $2.170 billion of tax-exempt and taxable bonds priced by BofA Securities on July 13.

Massachusetts issuers sold $12.2 billion, down 1.7% from 2021. Pennsylvania issuers sold $12.04 billion in 266 deals, down 32.1% from $17.7 billion the previous year.

New Jersey issuers sold $7.9 billion of municipal bonds, down 20.7% year over year. Issuers in Connecticut sold $5.811 billion of munis, down 20.9%.

Maryland issuers sold $5.4 billion in 2022, down 40.8% year-over-year. The District of Columbia’s issuers sold $3.8 billion, up 28.4%.

New Hampshire issuers sold $1.8 billion, up 3.1%; Maine’s issuers sold $1.2, down 6.6%.

Rhode Island issuers sold $1.1 billion, down 29.6%. Vermont issuance was down 47.5% to $222.4 million.

The U.S. Virgin Islands was on the board this year after selling $955.5 million of Virgin Islands Matching Fund Special Purpose Securitization Corp. bonds on March 31. It wasn’t in the market in 2021.

Puerto Rico issuers didn’t sell any debt last year in the primary after selling $1.7 billion in four deals in 2021.

“Last year was a very light year in terms of supply,” Glenn McGowan, co-head of municipal underwriting at RBC Capital Markets, said at The Bond Buyer’s 2023 National Outlook Conference on Feb. 2.

“The Bond Buyer numbers came out at $384 billion, down about 20% from 2021,” he said. “The interesting thing is that includes about $24 billion in private placements. So if you strip that out, and you look at what was actually sold to investors in the public markets, $360 billion is a pretty light number.”

He noted that in terms of performance, 2022 was a challenging year for every financial market.

“The total return for pretty much everything, except for a couple of commodity sectors, was decidedly negative,” he said. “The worst year for the bond market in decades — really since the 1980s.”

BofA Securities ranked first as senior manager in the Northeast last year, credited by Refinitiv with underwriting $14 billion of bonds in 77 deals. It was followed by JPMorgan Securities with $11.7 billion in 64 deals, Citi with $7.2 billion in 49 deals, Morgan Stanley with $6.9 billion in 59 deals and Jefferies with $6.4 billion in 31 deals.

The financial advisor rankings in the region were led by Public Resources Advisory Group, credited with $18.5 billion of business in 79 deals. It was followed by PFM Financial Advisors, credited with $10.3 billion in 63 deals, and Franca & Associates, credited with $8.7 billion in 37 deals.

Bryant Rabbino was the top Northeast bond counsel last year, credited with $9.7 billion of business in 34 deals. It was followed by Nixon Peabody, credited with $8.1 billion in 47 deals, and Orrick Herrington & Sutcliffe, credited with $7.8 billion in 113 deals.

Bond insurers backed 248 deals in the Northeast worth $7.525 billion last year, down 6.3% from the 458 deals worth $8.026 billion they insured in 2021.