Supply rose to nearly $60 billion in August, the highest ever total for the month, as concerns over rate hikes, large mega deals, and the late Labor Day holiday pushed issuance up year-over-year.
Issuance was $59.57 billion in 873 deals, up 14.5% year over year from $52.006 billion across 880 transactions. Supply is just shy of $400 billion year-to-date, up 4.1% from 2025.
The usual impression of August is that it's the "dog days of summer," so it should be a light month, said Pat Luby, head of municipal strategy at CreditSights.
But historically, it's been a month that's got a "decent" new-issue calendar, he noted, with this year boasting the largest monthly figure on record at just shy of $60 billion.
Concerns over interest rate hikes may have played a role in the rise in issuance, as some issuers that believe rates will get higher in the fall may have issued in August, said Craig Brandon, co-head of muni investments at Morgan Stanley Investment Management.
"If we think rates are just going higher in September and October, let's get the deals done now," he said.
August volume was also helped by the Labor Day holiday coming later this year, Luby said.
When Labor Day falls in the first days of September rather than in the second week of the month, issuance during the final week of August slows down, he noted.
Therefore, since Labor Day falls on Sept. 7 this year, some issuers pulled forward their deals to price before the holiday, Luby said.
August saw a spattering of mega deals, including California's upsized $3.14 billion general obligation bond offering, the largest of the month.
"Despite rising benchmark Treasury yields and uncertainty surrounding Jackson Hole, strong investor demand allowed the [California] deal to be upsized by $300 million," bringing the total offering above $3 billion, said Chris Brigati, managing director and CIO at SWBC.
Supply will continue through the remainder of the year, as there is plenty of appetite for new issues and expectations that the Federal Reserve will hike rates may incentivize issuers to no longer wait to come to market, Luby said.
In September, supply seems to be heavier earlier in the month than the previous year, said Aya Touil, a municipal bond trader at Morgan Stanley Investment Management.
This week sees $12.8 billion on tap, led by $1.933 billion of state sales tax revenue bonds from the Dormitory Authority of the State of New York in six series, sold in the competitive market Tuesday.
August details
Tax-exempt issuance rose 11.4% to $51.983 billion in 791 issues from $46.683 billion in 802 issues a year ago. Taxable issuance increased 39% to $3.274 billion in 69 issues from $2.356 billion in 65 issues in 2025. Alternative minimum tax issuance was $4.313 billion, up 45.4% from $2.966 billion in August 2025.
New-money issuance ticked up 1.3% to $38.91 billion from $38.404 billion, while refundings fell 20.9% to $6.393 billion from $8.087 billion.
Revenue bond issuance rose 13.1% to $38.153 billion from $33.723 billion in August 2025, and general obligation bond sales increased 17.1% to $21.417 billion from $18.282 billion in 2025.
Negotiated deal volume was up 19.4% to $48.915 billion from $40.972 billion a year prior. Competitive sales rose 16.7% to $10.597 billion from $9.082 billion in 2025.
Deals wrapped with bond insurance decreased 41% to $2.878 billion from $4.88 billion.
Bank-qualified issuance was up 13.8% to $798.5 million in 201 deals from $701.8 million in 180 deals a year prior.
California claimed the top spot year-to-date among states.
Issuers in the Golden State accounted for $64.223 billion, up 13.3% year-over-year. Texas was second with $50.974 billion, down 4.3%. New York was third with $36.986 billion, down 17.2%, followed by Florida in fourth with $17.554 billion, up 0.6%, and Alabama in fifth with $16.42 billion, a 145.6% increase from the same period in 2025.
Rounding out the top 10: Massachusetts with $14.061 billion, up 19.1%; Pennsylvania with $12.618 billion, up 2.4%; Michigan with $10.479 billion, up 28.3%; Washington with $10.42 billion, down 0.5%; and Illinois with $9.528 billion, down 10%.
