July 31, 2013 / 4:41 PM / 4 years ago

U.S. municipal bond issuance remains low as refunding falls

WASHINGTON, July 31 (Reuters) - The amount of debt sold by U.S. state and local governments and other authorities remained low in July, even as an uptick in new bond sales balanced out a continuing decline in refinancing, preliminary Thomson Reuters data showed on Wednesday.

Municipal bond issuance volume was $24.87 billion in July, 1 percent more than June's $24.6 billion. That was the lowest par volume for July in two years and was 7.4 percent less than the $26.85 billion issued in July 2012.

Meanwhile, the number of municipal deals - 711 - was lower than in both June and July 2012.

Fears of interest rate hikes have shaken the market this summer, and rising yields are curbing issuers' enthusiasm. Final data shows that June marked the lowest issuance for that month since 2000.

On Municipal Market Data's benchmark scale on Tuesday, yields on top-rated 10-year issues were 2.67 percent and on highly rated 30-years they were 4.20 percent. A year earlier, yields on 10-years were more than a percent lower at 1.66 percent and those on 30-years were only 2.84 percent, according to MMD, a Thomson Reuters company.

Refinancing, which had taken off as interest rates scraped record lows, is falling quickly. July marked the fifth month in a row that refinancing dropped.

The volume of refunding deals was only $9.36 billion in July, a 31 percent drop from the $13.56 billion in July 2012 and the lowest amount since $8.52 billion in May 2011. In June, refinancing volume was $12.68 billion.

This month, the number of refinancing deals, 217, was also less than half the number in July 2012, 468.

Just three years ago, in July 2010, refunding totaled $20.24 billion in 623 deals.

Bucking the trend, though, new money issuance ticked up slightly in July to $15.34 billion from $11.92 billion in June and $13.29 billion in July 2012. It was the first rise in par volume for new money since April.

Altogether, during the first seven months of the year issuers brought $194.85 billion to market, 10.8 percent less than the first seven months of 2012, the data showed.

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