Bond volume

Municipal bond issuance in the Midwest reversed course last year, falling by 7.4% to $77.5 billion.

Municipal bond issuers in the Southwest sold $90.8 billion of debt in 2021, down 3.2% from 2020 as lost refunding volume outpaced a gain in new-money sales.

Market volatility has led to munis seeing the worst performance to start the year since 2018 and the biggest monthly losses since March 2020.

January issuance declined by 14.7% year-over-year amid a rising-rate and volatile environment.

John Hallacy of John Hallacy Consulting LLC sits down with Chip Barnett to talk about what the municipal bond market will face in 2022. He discusses inflation, new issuance volume, and the future of infrastructure this year amid the lingering effects of COVID and Omicron. (19 minutes)

BofA Securities led with $62.01 billion of deals. Out of the top five, only Morgan Stanley increased its market share year-over-year.

The U.S. Treasury selloff caught up to tax-exempts with two to three basis point cuts to scales, but munis still outperform.

Municipal volume is estimated at $1.13 billion for the opening week of 2022. Persistently strong net supply challenges will bias credit spreads tighter, credit discipline weaker in the next few years, analysts say.

2022 volume projections are clouded by many uncertainties. What is not murky is that demand for municipals is unlikely to fade.

Investors will also receive $139 billion of interest payments in 2022, about $593 million more than in 2021, according to a report from CreditSights.

Total November volume was up 58.3% to $33.818 billion versus $21.359 billion a year earlier, but the figure is average over a 10-year period. A combination of factors from policy uncertainty in Washington to fears of rising rates led to the increase.

A majority of firms anticipate less volume in 2022 than the record hit in 2020, but how policies from Washington and the path of overall economic activity in a still-recovering global economy with COVID overhang make predicting volume more difficult.

CDFA is advocating for a holistic solution from Congress to address private activity bond challenges.

October has, on average, been the heaviest new-issue month of the year. Analysts said the lower volume, particularly taxables, was led by many issuers sitting on the sidelines, waiting for a potential package from Washington, D.C.

September issuance was down more than 32% from the same month in 2020; total issuance so far this year is at $346.48 billion, down 2.4% compared to last year.

The nearly 40% year-over-year decrease is a result of various factors including rising interest rates, other financing tools, such as forward delivery bonds, and simply that refundings are in less demand from issuers.

New money volume in the Far West was up 31.9% to $29.5 billion, while refunding volume rose a more modest 11%.

A large increase in new money bond issuance pushed the 11-state region to a big year-over-year volume gain.

An uptick in new money borrowing fell far short of making up for a decline in refundings.

Municipal bond volume in the Southwest region increased in the first half of 2021 as its seven other states more than made up for a decline in Texas.