New Jersey's government bond market has once again seen fewer bonds issued in the first half of the year, this time dropping off more precipitously.

The overall value of the bonds, meanwhile, is up, though one multibillion-dollar issue accounts for more than half that value, according to data from Thomson Reuters.

The data shows there were 86 bond issues through June 2018 at a total value of $5.44 billion. That's a 27.1 percent decrease in the number of issues, and an 18.8 percent increase in par amount, compared with the first half of 2017, when 118 bonds worth a combined $4.58 billion were issued.

There were 173 issues worth $4.28 billion in the first half of 2016; 180 issues worth $3.35 billion in the first half of 2015; in 2014, 147 issues worth $5.01 billion; in 2013, 165 issues worth $9.33 billion; in 2012, 217 issues worth $5.23 billion; in 2011, 117 issues worth $4.62 billion; in 2010, 165 issues worth $6.79 billion; and in 2009, 145 issues worth $6.76 billion.

Media reports and public finance lawyers alike indicate that the decrease in volume is tied to the federal tax reform package that took effect at the beginning of this year. Advance refundings—whereby government entities essentially refinance existing debt at better interest rates, but before the original bond matures—were eliminated in the revised tax code.

“There was a lot of angst when the code was being changed, by local governments,” according to Edward McManimon III of McManimon, Scotland & Baumann in Roseland. But those favoring the change ”felt there was just a churning” of the bond market by underwriters, he said—”issuing debt for the sake of issuing debt.”

“That's definitely the case, and that's not just New Jersey,” Tassos Efstratiades, chairman of the public finance practice at Obermayer Rebmann Maxwell & Hippel, said of the effect the tax code revision is having on the volume of bond issues.

Another potential reason for low volume in 2018 so far, according to Efstratiades: Private activity bonds, whereby government entities issue debt to finance certain types of projects by private companies, also were on the chopping block in the tax reform package, but ultimately were not eliminated in the legislation. Fear that private activity bonds would become a tax reform casualty likely spurred government units to issue those bonds late last year, rather than wait until 2018, he said.

The lawyers said lobbyists are petitioning Congress to change back the tax code to authorize advance refundings.

“But I don't know that they'll succeed,” McManimon said. “We're not presuming the change.”

This year's total value is bloated by one enormous issue: a $3.15 billion refinancing of bonds backed by payments to government entities via tobacco industry products liability settlements. The transaction was done by the New Jersey Tobacco Settlement Financial Corp.

The next-largest financings for the first half of 2018 were a fraction of that size: a $378.93 million series of single family mortgage revenue bonds from the New Jersey Housing and Mortgage Finance Agency, and $375.68 million in state lease revenue bonds from the New Jersey Economic Development Authority.

For the first half of last year, the largest issue was a series of transportation project sublease and refunding bonds issued by the NJEDA in January 2017, worth $627.66 million in total.

The Law Journal's bond counsel list, ordered by market share, is topped by Chiesa Shahinian & Giantomasi this year. The West Orange-based firm worked the tobacco refinancing and the NJEDA state lease revenue bonds. With a par amount of $1.95 billion, the firm had a 35.9 percent market share, according to the data. Chiesa Shahinian ranked third last year, with a 14.7 percent market share for the first half of 2017.

Ranking second is M. Jeremy Ostow of South Orange, whose involvement in the tobacco refinancing—his lone engagement—meant a market share of 28.9 percent on a par amount of $1.57 billion. Last year Ostow ranked eighth, with a 3.3 percent market share.

McManimon Scotland ranks third, working on 21 bond issues with a par amount of $458.4 million for the first half of the year, a market share of 8.4 percent. The largest financing in which the firm was involved was a $215.85 million series of student loan revenue bonds by the New Jersey Higher Education Student Assistance Authority. The firm ranked second last year, with a 26.1 percent market share.

Ranking fourth is Obermayer Rebmann, a Philadelphia-based firm with an office in Cherry Hill, which worked on three issues worth a combined $378.9 million, making for a 7 percent market share. The firm handled the HMFA's mortgage revenue bonds. The firm was not ranked last year.

Four firms, with a market share of between 3 percent and 4 percent, follow on the list: Wilentz, Goldman & Spitzer; McCarter & English; Rogut McCarthy; and Parker McCay.

McManimon said the elimination of advance refundings in the tax code has repercussions for public finance practice, where attorney rates are competitive and subject to requests for proposal.

“You can't decide, you've got fewer deals, so you're going to charge more money,” he said. “You just make less money.”

McManimon, however, pointed out that much of the work that public finance practices do is not borne out in the data. Government notes, which are shorter-term borrowing instruments, keep bond counsel busy, he said. And McManimon Scotland recently has worked on privatization of public utilities, and has represented Triple Five Worldwide in connection with the American Dream mall project in the Meadowlands, according to McManimon.

Efstratiades said a push for public-private partnership projects can create work for public finance practices, and as for local governments and school boards, “there's always going to be a need for money at that level.”

Still, public finance practice is “probably going to be somewhat stagnant for the near future,” he said. “We don't know, because a lot of it is legislation-driven.”

Obermayer Rebmann recently added a lateral hire to do municipal and school bond work, said Efstratiades, adding that the talent pipeline for bond attorneys can't be taken for granted moving forward.

“The practice isn't going to go away, but it's definitely going to evolve,” Efstratiades said. “We have to try to plan ahead and find the best way to keep the practice active.”