Bond volume

Total volume in 2022 was at $389.094 billion in 9,123 deals, down 19.5% from the $483.358 billion in 13,130 deals in 2021, according to Refinitiv data.

The transportation bond sector may see the greatest growth in 2023 as a result of the infrastructure act, one analyst said.

"The large taxable refunding or combined transactions were accomplished earlier in the year when rates were relatively low," says John Hallacy.

"I think ESG is here to stay in our market. I think it's a natural fit with the types of infrastructure that our market finances," said MSRB CEO Mark Kim.

"January issuance is at a multi-year low, with large declines in both taxable and tax-exempt issuance," said Matt Fabian, a partner at Municipal Market Analytics. 

The muni market saw $384.086 billion of debt sold in 2022, nearly $100 billion less than $483.234 billion in 2021.

Projections for total bond volume in 2023 are at a high of $500 billion and a low of $302 billion, continuing 2022's lackluster growth.

Investors will be greeted Monday with a new-issue calendar estimated at $3.214 billion, the majority of which is a nearly $1.9 billion private activity P3 bond deal from Pennsylvania.

Total November volume stood at $19.712 billion, the lightest of any month year-to-date, in 527 versus $37.073 billion in 1,055 issues a year earlier, according to Refinitiv data.

The Bloomberg Municipal Index is at positive 4.06% as of Friday. Bloomberg indices show high-yield returning 4.17%, taxable munis returning 4.38% in November while the Impact Index is at positive 4.66%.

With the Federal Open Market Committee meeting this week and the next week shortened by the bond market observance of Veterans Day, CreditSights strategists said "investors should be prepared for two weeks of subdued new issuance."

Total October volume was $24.951 billion in 510 deals versus $41.811 billion in 1,068 issues a year earlier, according to Refinitiv data.

While October is typically a busy issuance month, 2022 is not shaping up to be as more issuers are sidelined by volatility. The primary market will see another light calendar in the holiday-shortened week.

Triple-A yields rose more than three-quarters of a point on the front end and nearly half a point out long in September as munis posted 3.84% losses.

For the first three quarters, total issuance sits at $308.440 billion, down from $361.932 billion in 2021. Taxables are down 48.0% to $45.724 billion from $87.979 billion.

John Hallacy talks with Chip Barnett about how fiscal and monetary policy is affecting the municipal bond market. He discusses recent data releases, supply forecasts and the midterm elections and the future of ESG in public finance. (20 minutes)

Municipals saw more cheapening on the short end Friday as selling pressure persisted all week.

Many market players have revised their supply projections downward since rising interest rates have slowed down refunding and taxable volumes and general market volatility has stopped some issuers from participating.

Higher education borrowing led by century bond deals helped offset the dive in refundings brought on by rising interest rates.

Spreads on underwriting municipal bonds dipped to below $4 per $1,000 on issues in the first half of 2022 due to heavy competition and a shrinking volume of deals — the lowest figures reported in two decades.