Tax-exempt debt issuance for senior living remained steady in the first half of 2013 compared to the previous-year period, according to Ziegler. Debt issuance skewed heavily on refunding issues and totaled $1.45 billion through June 30, just slightly higher than $1.36 billion in the first half of 2012.
Refundings accounted for two thirds or 67% of public debt issuance, marking the greatest proportion of refundings in the sector since pre-1990, Ziegler reports, due to the low interest rate environment. Refundings totaled around $975 million, with new money issuance comprising the remaining $475 million. The proportions reflect a similar breakdown for the first half of 2012.
Debt issuance remained a majority fixed-rate, comprising all but $25 million of the period’s volume, Ziegler notes, of which rated borrowers made up 45% of the volume.
The outlook, however, is difficult to project, Ziegler writes.
“With the recent back-up in municipal bond rates, including in the senior living sector, gauging activity for the rest of 2013 is more difficult,” Ziegler notes. “While some of the refinancing issues previously on the calendar are at the moment no longer economically feasible, the market continues to absorb new
money project financings and the refinancings that do still make sense, at accommodating rates.”
New money financing may comprise a greater proportion of financing in the second half of the year, Ziegler says.
“Today, we would expect new money financings to make up greater percentage of new issues in the second half of the year, and for volume to come in shy of 2012.”
Written by Elizabeth Ecker