Supply was up in September — despite the extreme volatility that plagued the market in the month and the rout that happened toward the second half — as increased project costs, expiring COVID-era aid and future Federal Reserve rate hikes helped bring issuance to a record total for the month.
Issuance was $55.454 billion in 784 deals, up 13.7% year over year from $48.754 billion across 802 transactions. This is the highest total for a September, according to LSEG.
Supply is $458.527 billion year-to-date, up 6.3% from 2025.
The extended two-week selloff toward the second half of the month affected new issuance, with deals moved to the day-to-day calendar or delayed, but that did not stop issuance from rising year-over-year.
However, refundings, which were down 25.4% in September year-over-year, were particularly impacted by the volatility.
Some refunding deals were shelved, including the $797 million North Texas Tollway Authority deal and the $790.8 million from the Convention Center Authority of the Metropolitan Government of Nashville and Davidson County, as the economics no longer made sense.
The latter priced on Sept. 30 as the market rallied to close out the month, giving the issuer the opportunity to come in during a break in the volatility.
The volatility has had a bifurcated impact on issuers, said Elaine Brennan, executive director of the public finance department at Roosevelt & Cross.
Some of the large issuers will just say, "Look, we've been through this before. We've seen rates go up 100 basis points in a six-month time period. Let's just get our borrowing done efficiently and the best we can, and move on," she noted.
But some of the smaller issuers, with maybe only a $100 million deal, may decide to wait — even until next year, according to Brennan.
They think: "We don't need to build that building [right away]. We can make do with what we have until it's a calmer market," she said.
Outside of the volatility, inflation played a role in increased issuance, as it leads to higher infrastructure costs, said Cooper Howard, director of fixed income research and strategy at Charles Schwab.
This means some project costs will come in higher than budgeted, so if issuers can upsize the deal, they will, Brennan said.
Increasing deal sizes plays a role in the proliferation of mega deals as it now costs more to get things done, she noted.
September saw several mega deals, including the $3.786 billion Alabama Toll Road, Bridge and Tunnel Authority deal, the largest year-to-date.
Another factor in rising volumes is expiration of COVID-era stimulus funds, which are being replaced by borrowing, Howard said.
Additionally, the Federal Reserve hiking interest rates at its September meeting impacted issuance.
Some issuers may see that the Fed just tightened and could tighten again this year, so they think, "Let's just get our financing needs in," Brennan said.
Furthermore, some issuers need to do their capital borrowing no matter what the rates are, and unless there's a sense that rates will come down with the next release of economic data, then why wait, she said.
As issuance continues on its upward trajectory, "the big question isn't necessarily the issuance that's coming to market. It's going to be: is there enough demand that can support that? And if you look at where yields are today and relative ratios, that's supportive of crossover buyers and demand coming back into the market," Howard said.
September details
Tax-exempt issuance rose 17.9% to $51.047 billion in 720 issues from $43.296 billion in 721 issues a year ago. Taxable issuance increased 3.4% to $2.69 billion in 52 issues from $2.601 billion in 70 issues in 2025. Alternative minimum tax issuance was $1.718 billion, down 39.9% from $2.857 billion in September 2025.
New-money issuance rose 44.2% to $45.533 billion from $31.582 billion, while refundings fell 25.4% to $4.71 billion from $6.315 billion.
Revenue bond issuance rose 22.8% to $38.932 billion from $31.706 billion in September 2025, and general obligation bond sales decreased 3.1% to $16.523 billion from $17.047 billion in 2025.
Negotiated deal volume was up 8% to $42.717 billion from $39.558 billion a year prior. Competitive sales rose 62.6% to $12.556 billion from $7.724 billion in 2025.
Deals wrapped with bond insurance increased 16.7% to $3.393 billion from $2.908 billion.
Bank-qualified issuance was down 10.6% to $744 million in 175 deals from $832.4 million in 191 deals a year prior.
California claimed the top spot year-to-date among states.
Issuers in the Golden State accounted for $69.331 billion, up 10.1% year-over-year. Texas was second with $58.833 billion, down 5%. New York was third with $43.415 billion, down 10.7%, followed by Alabama in fourth with $21.198 billion, up 90.9%, and Florida in fifth with $19.757 billion, a 6.3% increase from the same period in 2025.
Rounding out the top 10: Massachusetts with $15.633 billion, up 9.7%; Pennsylvania with $14.989 billion, up 15.7%; Illinois with $13.603 billion, up 17.8%; Michigan with $11.603 billion, up 25%; and Washington with $11.152 billion, down 1.4%.
