Far West in a nutshell: low rates outweigh viral uncertainty
March 5, 2021 1:59 PM
A big year in the Far West
Far West municipal issuers sold $99.1 billion of debt last year, a 16% increase from 2019, picking up the pace in the second quarter after a hiccup in March when the coronavirus first put society on pause.
Low rates, in the end, outweighed pandemic uncertainty
“The big story was rates last year. That drove a lot of volume,” said John Hallacy, founder of John Hallacy Consulting LLC. “Earlier in the year, everyone was dealing with uncertainty and they were nervous about whether they could get deals done.”
Issuers may have run through many of their refunding candidates
The California State Treasurer’s Office sold a higher percentage of new money bonds in 2020 than in 2019, when about two-thirds of its volume was refunding. “That is a trend I expect you will continue to see, with us doing less and less refunding going forward,” said Tim Schaefer, deputy treasurer for public finance. “We have mostly picked off the low-hanging fruit.”
It was a big year for taxable debt
The volume of taxable bonds sold in the Far West more than doubled year-over-year to $36.9 billion in 2020, while tax exempt sales fell 6.1% to $59.8 billion. “Taxable issuance certainly increased in 2020,” said Sara Oberlies Brown, a Stifel Nicolaus managing director. “I think we will continue to see that in 2021.
BofA heads the regional league table
BofA Securities topped the senior manager rankings in the region as it did nationally, credited by Refinitiv with $12.9 billion in 101 Far West deals, followed by JPMorgan and Citi.
As California goes, so goes the Far West
The nation's most populous state was the largest source of issuance for the municipal bond market in 2020, accounting for more than $70 billion of bonds sold and more than 71% of the region's volume.
