LR firm tops list in bonds dealings

Crews executed $805M in state

Graph and information about Arkansas bond underwriting in 2015.
Graph and information about Arkansas bond underwriting in 2015.

Crews & Associates Inc. of Little Rock was the leading municipal bond underwriter in Arkansas last year, according to statistics from Thomson Reuters.

Crews underwrote more than $805 million in bonds in the state, more than double that of second-place Stephens Inc. of Little Rock, which handled more than $380 million.

There were almost $2.4 billion in municipal bond issues in Arkansas last year, up more than 19 percent compared with 2014, Thomson Reuters said.

"The continuation of very low interest rates for the majority of the year," was the main reason for the increase in bond deals, said Dennis Hunt, executive vice president and head of public finance at Stephens. Hunt, who has worked for Stephens for 22 years, directed Stephens' offices in Northwest Arkansas before he was named to his current position in February.

Holding back a bigger increase in bonds last year was a significant decline in volume in November and December, Hunt said. Volume nationally was down about 48 percent in December compared with December of 2014, he said.

Crews, which is owned by First Security Bancorp of Searcy, handled a "healthy mix of refinancings" as well as issues for new projects, said Edmond Hurst, senior managing director at Crews.

"We saw some larger individual transactions this past year than what we had seen," Hurst said.

The two largest deals on which Crews was the lead manager were a $158 million Little Rock sewer revenue bond issue and a $126 million state issue, Hurst said.

Both of those deals were refinancings, Hurst said. The benefit to refinancing is the same for the issuer of bonds as it is for a homeowner who refinances his mortgage.

Crews has focused on finding customers who would benefit from refinancing bond issues, Hurst said.

"If you're borrowing money and you have a set amount of taxes or a set amount of revenue stream that can only support so much in debt. Then the lower the interest rate the more you're able to borrow or the less you're having to allocate toward debt services," Hurst said.

Crews was the lead manager on 56 bond issues in 2015, up from 43 in 2014. Crews' average bond transaction in Arkansas last year was more than $14 million.

Stephens handled 40 bond issues in 2015.

Stephens' biggest bond deal of the year was an issue of more than $80 million by the University of Arkansas.

Hurst and Hunt were hesitant to forecast what will happen with interest rates this year.

Hunt said he had anticipated for several years that the Federal Reserve would raise interest rates.

"But they did it only once [in December]," Hunt said. "And the [municipal bond] market has actually improved since they raised rates."

Hurst said no one really knows how interest rates will change this year.

"We've seen the [Federal Reserve] raise short-term interest rates a little bit but it has had very little to no impact on the market," Hurst said. "There are a whole host of things that we'll have to watch to see how it plays out this year."

For the fourth year in a row, Bank of America Merrill Lynch was the largest underwriter of municipal bonds in the United States, managing about $52 billion of state and local government debt deals, Bloomberg News reported.

Overall, states and local governments issued about $420 billion in long-term and short-term debt in 2015, 16 percent higher than in 2014 and the highest level since 2012, Bloomberg said.

Volume was driven by refinancings of higher-cost debt in advance of the Fed's first interest-rate increase in nine years.

Of the 10 biggest deals nationally in 2015, only Georgia borrowed more for new projects than to refinance debt. Bank of America managed the biggest deal of the year, a $2.2 billion issue by New Jersey's Economic Development Authority, according to Thomson Reuters.

SundayMonday Business on 01/10/2016

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