Southwest bond volume growth trails nation amid Texas dip

Municipal bond issuance growth slowed in the Southwest where it was up just 8.1% year-over-year in the first half of 2025 to $54.9 billion as Texas bond sales dipped.

Nationwide volume was up 14.7% at $281.8 billion with the Southwest lagging the Far West, Midwest, and Northeast regions, which had bigger gains, according to LSEG Data.

At 2024's half point, issuance in the eight-state Southwest region was up 29.8%. It grew by 23% for the full year led by Texas where bond sales reached a record $68.13 billion.

In 2025's first half, issuers in the Lone Star State sold $30.53 billion of municipal bonds, down 7.6% compared to the same period in 2024. Texas still ranked second behind California's $45.64 billion of bonds. Issuance was also down 6% in Oklahoma, while other Southwest states had increases ranging from nearly 36% in Colorado to 140.5% in New Mexico.

David Medanich, Hilltop Securities' co-head of public finance, said the muni market remains solid with tax-exemption intact, interest rates stable, and the need for infrastructure high.

"There's a feeling in the air that maybe things are pretty strong and let's get things done while we can and we've got the need," he said.

The Oklahoma Turnpike Authority's $1.259 billion revenue bond sale through Goldman Sachs in January was the region's biggest deal in the first half. It marked a second round of financing for a controversial $8.2 billion program to widen existing toll roads and build new ones.

The second largest was a $868.7 million offering from the North Texas Municipal Water District through JP Morgan in June, followed by an $844.4 million sales tax revenue bond issue by the Downtown Revitalization Public Infrastructure District in Utah through Goldman Sachs. The June 5 deal was the first for the district, which was created to finance renovations to a Salt Lake City arena that is home to the National Basketball Association's Utah Jazz and the National Hockey League's Utah Mammoth. 

The region's top issuer was the University of Texas System Board of Regents with $1.714 billion of bonds, followed by the Oklahoma Turnpike Authority, buoyed by its January sale, and Dallas Independent School District with $1.18 billion of debt.

Education continued to be the biggest category for issuance in the Southwest with $22 billion of bonds sold, down 1.8% from the first half of 2024. Armed with general obligation bond authorization granted by voters in recent years, Texas public schools continue to be prolific debt issuers.

In the May 3 election, voters rejected only $1.35 billion of the $12.95 billion of bond authorization sought by schools, according to data from the Texas Bond Review Board. Outstanding school debt totaled $130.2 billion as of Aug. 31, 2024.

Texas schools are also racing to market ahead of a Sept. 1 deadline to take advantage of a  hold harmless provision for existing debt under an enabling act for a constitutional amendment on the Nov. 4 ballot to increase the homestead exemption for school property taxation to $140,000 of market value from $100,000.

The region's issuance of electric power debt was up 116.3%, housing bond volume climbed 57.5%, and healthcare volume fell nearly 30%.

Volume of bonds wrapped with insurance bonds rose 20.1% to $6.24 billion in 275 issues. 

JP Morgan Securities, which ranked seventh in the region in 2024, was the region's top underwriter in 2025's first half, credited by LSEG with 35 deals totaling $6.68 billion. RBC Capital Markets ranked second with 55 deals totaling $5.9 billion. BofA Securities, the region's top underwriter in 2024, came in third with nearly $4 billion in 41 deals.  

In Texas, the top five underwriters were JP Morgan, Raymond James, Jefferies, RBC Capital Markets and Wells Fargo. 

Hilltop Securities

In January, the Texas Attorney General's Office ended reviews of JP Morgan, Wells Fargo and other investment banks after they withdrew their memberships in the Net-Zero alliance, which seeks a transition to net-zero greenhouse gas emissions by 2050.

The reviews could have led to banks being banned from underwriting state and local government debt under a Texas law that bars contracts worth $100,000 or more with companies that "boycott" the fossil fuel industry.

JP Morgan and BofA continue to be reviewed in conjunction with another Texas law that prohibits governmental contracts with companies that "discriminate" against the firearm industry.

Oklahoma, which enacted a similar firearm law that takes effect Nov. 1, has banned BofA, JP Morgan, Wells Fargo and Barclays from underwriting state and local government debt for boycotting energy companies under a 2022 law that was determined to be unconstitutional last year by a state judge. An appeal of that ruling is pending before the Oklahoma Supreme Court.   

BofA ranked second behind Goldman Sachs for top senior manager in Oklahoma for 2025's first half on the strength of a $400 million special facility revenue bond issue backed by American Airlines and issued through Trustees of the Tulsa Municipal Airport Trust. 

Bond counsel rankings for the Southwest region have McCall Parkhurst & Horton on top for the first half, credited with $11.24 billion of debt in 158 deals, followed by Bracewell with $5.37 billion in 64 deals. Both firms ended 2024 in the same positions. Gilmore & Bell moved up to third place from fourth in 2024 with $5.138 billion of bonds in 111 deals.

Hilltop Securities continued its dominance as the region's top financial advisor, credited with nearly $14.7 billion of debt in 173 deals. PFM Financial Advisors remained in second place with $3.75 billion in 34 deals and Specialized Public Finance, which was in fifth place last year, ranked third with $3.59 billion in 76 deals. 

Estrada Hinojosa, which was acquired a year ago by Texas Regional Bank, fell from third place in the region for 2024 to 12th place in 2025's first half. Noe Hinojosa, president of TRB's Municipal Capital Markets Division, said the Dallas-based firm will be participating in big bond deals in the coming months.

"Our pipeline is stronger than I've ever seen in the history of the firm," he said, adding market volatility and a barrage this year of Texas bills seeking to restrain local government and school debt and taxes put the brakes on some issuance in the first half of the year.