Texas municipal bond sales set a record in 2025

Municipal bond issuance in Texas zoomed to a record high $82.52 billion in 2025, up 21% from 2024's $68.13 billion.

The debt surge landed Texas in second place behind California's $83.6 billion and well ahead of third place New York's $63.203 billion, according to LSEG data available at year-end. Bond deals by state and local issuers in Texas accounted for 14.2% of 2025's record nationwide issuance, which totaled nearly $580 billion.

The Texas bond boom reflects infrastructure needs driven by the state's growing population, said Noe Hinojosa, president of Estrada Hinojosa, a division of TRB Capital Markets. 

"Texas continues to be the cradle of opportunity and… literally every single political subdivision is being asked to put investments in their assets," he said.

For 2026, Hinojosa said he expects similar strong issuance, adding that anticipated interest rate cuts by the Federal Reserve would drive more refinancings, which "have dropped significantly."

Another year of record debt sales in Texas came amid continued attempts by state officials to restrict them at the local government level, while enhancing debt transparency.

During the 2025 Texas legislative session, lawmakers targeted debt issuance by cities, counties, schools districts, and other local entities by introducing bills requiring supermajority voter approval for bonds, while limiting bond elections to the November ballot, as well as restricting the sale of anticipation notes and certificates of obligation and setting a limit for maximum annual debt service on GO bonds.

While the measures failed to pass, more are likely when the legislature returns to session in 2027. Meanwhile, Gov. Greg Abbott has called for a constitutional amendment to end school property taxes.

In December, the Texas Comptroller's Office launched a local government bond, tax, and project transparency database in accordance with a law that took effect Sept. 1. 

"This database empowers taxpayers with timely, accessible information on bonds, tax rate elections, and project spending," Acting State Comptroller Kelly Hancock said in a statement. "It reflects our commitment to transparency and informed decision-making across Texas communities."

Local taxing units were required to submit data, including a one-time submission of historical information covering tax years 2015 through 2025 by Jan. 1.  

Deals last year in The Lone Star State included some biggest-ever and first-ever issuances.

The Texas Water Development Board's September sale of $1.83 billion of triple-A-rated revenue bonds marked its largest-ever debt issue since the inception of the State Water Implementation Fund for Texas program  in 2015.

The state sold $653.7 million of tax-exempt and taxable general obligation bonds for projects in its water plan. The deal marked the first time financial assistance through GO bonds provided an interest-rate subsidy and the first time a transfer from the SWIFT will provide additional revenue to pay debt service.

October brought the debut of a new issuer, the Texas Transportation Finance Corporation, which sold $1.7 billion of mostly tax-exempt subordinate tier toll revenue and refunding bonds to provide long-term financing for the 2024 termination of a public-private partnership that built managed toll lanes in the Houston area.  

The bonds refunded $1.7 billion of Series 2024 subordinate tier notes the corporation privately placed with the Texas Department of Transportation. 

The Texas Transportation Commission took action in March 2024 to end a 52-year comprehensive development agreement reached in 2016 with BlueRidge Transportation Group, LCC to build and operate the State Highway 288 System project.

Dallas Fort Worth International Airport had its biggest one-day debt sale in September with a $1.967 billion joint revenue refunding and improvement bond issue that won the airport its second consecutive Southwest region win in The Bond Buyer's 2025 Deal of the year awards.  

The deal included the largest offering of mandatory tender bonds by an airport issuer and allowed DFW to lock in debt service savings in the initial four- and seven-year periods compared to issuing traditional fixed-rate bonds maturing in 2050.

The Harris County Hospital District sold $808.5 million of limited tax bonds in May, marking its first issue to tap $2.5 billion in debt authorization voters approved in 2023 for a $3.2 billion expansion project.  

Triple-A-rated Texas ended fiscal 2025 on Aug. 31 with $77 billion of total state debt, up from $73 billion at the end of fiscal 2024, according to the state's Bond Review Board's annual report. State agencies, colleges, and universities sold $9.686 billion of bonds in fiscal 2025, compared to $8.35 billion in the prior fiscal year. Issuances ranged in size from $11.1 million to $1.21 billion.

"The weighted average of issuance costs for state bond issuers was $4.64 per $1,000, excluding issuances of conduit and private placement debt," the report released in December said. "In comparison, the same weighted average was $5.28 per $1,000 for fiscal year 2024."

Dallas Fort Worth International Airport

The weighted average underwriting spread accounted for 67.8% of all issuance costs and decreased to $3.12 per $1,000 of bonds from $3.64 in fiscal 2024. 

Texas state issuers expect to issue nearly $12 billion of bonds, commercial paper, and variable-rate notes in fiscal 2026, which would be an increase of $1.4 billion or 13.2% over the amount projected for fiscal 2025, according to the report.

As for local bond issuance, Texas ballots were stuffed with an eye–popping nearly $93 billion of bond requests on Nov. 4, according to Texas Bond Review Board data. Development-related districts accounted for $80.88 billion in sometimes-inflated proposed authorizations, which mostly passed. 

Masterson Advisors' special district group had record volume in 2025 driven by suburban and exurban developments across Texas, according to CEO Drew Masterson, who said a 20% volume decrease is anticipated for 2026 due to rising inventories. 

Public school districts, which have been prolific debt issuers, are confronting increasing opposition from voters, who rejected 35.8% of the $10.43 billion of bonds schools sought in November, according to the Bond Review Board data. In the May 3 election, only 10.5% of the nearly $13 billion of school bond propositions failed to pass.