Electric power and education were the most rapidly expanding sectors in the first half of the year.
Electric power was up 47.8%, education was up 31.6% and general purpose was up 24.3% in the first half from the same period of 2024.
Overall municipal bond volume was up 14.7% in the first six months of 2025.
All data is from LSEG and all percentages are for changes in dollar issuance volume in the first half of 2025 compared to the first half of 2024.
Electric power issuers sold $15.2 billion in securities and education issuers sold $85.3 billion in the first six months of the year. Across all sectors, municipal issuers sold $281.8 billion.
The volume of electric power, education and general purpose expanded rapidly in the first half due the disappearance of federal COVID aid, said Kim Olsan, senior fixed income portfolio manager at New Square Capital. Population growth in certain areas and inflationary pressures may also have been factors, she said.
Education was up due to growth in the Sunbelt, said John Hallacy, president of John Hallacy Consulting, LLC. A portion was charter school issuance. "Some of the laws have changed and there will be more support for charters in the future."
The spike in education issuance resulted partly from issuers "getting out in front of potential policy changes due to risk that legislation would curtail the future ability to issue, and the desire to build liquidity in the face of research and other federal funding cutbacks," said Chad Farrington, co-head of municipal bond investment strategy at DWS.
"Electric power is up because folks are now scrambling to provide power for data centers," Hallacy said. "Refiring mothballed nuclear plants is also a theme. Transmission still needs improvement. And more producers are bringing more solar and wind power online."
In the electric power sector, first quarter issuance was up 109% and second quarter was up 9.1%. These compare to figures for all muni issuance of 15.9% and 13.9%, respectively. The general environment was calm in the first quarter but President Trump's tariff announcements in April triggered widespread fear, Olsan said, and caused some issuers to postpone deals. This may have been particularly pronounced in the electric power sector, Olsan said.
Higher construction costs contributed to increased issuance in many sectors, including in electric power, education and general purpose, Farrington said.
In the first two sectors in particular, the growth in new money bond volume was far beyond that for the refunding and/or combined sectors. Electric power new money was up 104.1%, education new money was up 49.3% and general purpose new money was up 27%.
In the general purpose sector, second quarter issuance was up 41.8%. Olsan said many issuers deferred maintenance during the COVID pandemic, leading to this increase in volume.
In the development sector tax-exempt issuance was up 41.5% and taxable was down 41.4%, compared to all sectors, which saw 16.4% and 1.8% increases, respectively.
In general purpose the taxable issuance was up 32.9%, while tax-exempt jumped 23.4%.
In the
Farrington said continuing care increased because it was depressed in 2024.
The senior living subsector experienced stresses following COVID that caused defaults and lack of investor demand, he noted. "As credit trends stabilized and tightened in 2024 and into early 2025, financing rates for new projects became more reasonable, allowing for an increase in issuance," Farrington said.
While the use of variable rate securities with long or no puts was up 56.3% across all sectors, it was up 143.8% in the healthcare sector. Olsan said this was likely because of the sector's greater infrastructure needs.
The transportation sector was the only sector to decline in the first half, shrinking 3.2%. However, the
"The push is on for airport modernization again," Hallacy said. "The newer generation of large aircraft need new gate configurations to be accommodated."
In the transportation sector, taxable was down 59.4%.
