Bond volume

In a week that culminated in headline-grabbing events — a presidential debate, several Supreme Court decisions, more macroeconomic data to add to Fed policy expectations — municipals closed on a quiet note and in the black for June.

In the first half of 2024, winding-down federal aid, a resurgence of Build America Bond refundings and election uncertainty have contributed to the surge in issuance, said James Welch, a portfolio manager at Principal Asset Management.

Total volume currently stands at $224.13 billion, up 38.5% from $161.848 billion at this time last year. As the end of the first half approaches, several firms are revisiting their supply projections for the year, given the growth so far this year.

While particpants expect some pressure in the near-term with more than $16 billion on tap, they also say the current yield and ratio levels offer investors opportunity.

May volume "surprised on the high end and it has been one of the fastest starts to the year historically," said James Pruskowski, chief investment officer at 16Rock Asset Management.

"For each May dating to 2021, the average 30-year MMD was 2.74% — or 122 basis points below the current yield," FHN Financial's Kim Olsan said. "The recent adjustment offers better investor value."

A supply surge hits the market as The Bond Buyer 30-day visible bond volume ticks in at $17.67 billion, $10 billion of which will come the first full week of May, just as macroeconomic data moves all markets to rally.

Healthcare issuance is up 122.2% year-over-year through April, rising to $9.062 billion through the first four months of 2024 from $4.078 billion over the same time period in 2023, LSEG data shows.

April's volume stood at $40.456 billion in 653 issues, up 21.2% from $33.377 billion in 666 issues in 2023.

Jeffrey Scruggs, Managing Director and Head of Public Sector and Infrastructure Group at Goldman Sachs, sits down with Bond Buyer Executive Editor Lynne Funk on the state of the muni industry.

The pace of the issuance and the increase of refundings, surging 59.6% in the first quarter of 2024, have also led some firms to up their overall 2024 issuance projections.

March issuance came in at $36.405 billion, above the $34.579 billion 10-year average, according to LSEG Refinitiv data. 

High rates and high inflation, coupled with rich reserves, pushed off or delayed issuers coming to market in 2023, noted James Pruskowski, chief investment officer at 16Rock Asset Management.

The week ahead boasts some big-name issuers and rare credits, which should provide interesting price discovery. The new-issue calendar totals $6.08 billion, with a larger competitive calendar coming in at $2.4 billion.

Bond volume fell slightly, as volatility, higher interest rates, falling pandemic aid and slower economic growth kept issuers on the sidelines.

"Even though it is hard to see the market falling out of bed and underperforming in the near term, we are more cautious going into March," Barclays PLC said in a report.

A majority of those polled at The Bond Buyer's 2024 National Outlook Conference also felt issuance would increase moderately this year, to between $400 billion and $450 billion.

Issuance for the month is slightly above the $27.666 billion 10-year average, according to LSEG Refinitiv data.

Interest rates and federal elections hang heavy over the industry and municipal analysts believe certain muni sectors or subsectors will experience credit deterioration.

The muni market saw $379.992 billion of debt issued in 2023, only $11.076 billion less than the lackluster $391.068 billion seen in 2022.