Bond volume

The calendar next week largely continues "the elevated pace of primary market volume seen since May, against a backdrop of broadly supportive fund flows (LSEG inflows for eight consecutive weeks), somewhat better dealer positions (although still heavy), mid-August reinvestment to spend, but lighter late summer attendance," said J.P. Morgan strategists led by Peter DeGroot.

Issuers in five Far West states increased their borrowing the first half of the year, while four saw sizable decreases.

The region's municipal bond volume grew by 42.4%, outpacing the nationwide 32% increase in a first-half marked by gas prepay deals and Brightline's big sale.

Issuers in the eight-state region sold $50.6 billion of bonds with Texas accounting for 65% of the volume.

Part of the surge in issuance came from issuers tapping the capital market after several years due to the inability to no longer postpone long-delayed projects and the drying up of pandemic aid.

Underwriting spreads rose to $7.11 in the first half of 2024 from $3.70 in the first half of 2023.

Data shows the average bids per competitive sale is up noticeably over the past few quarters, Justin Marlowe said, rising to 8.5 bids in Q1 2024 from 6.1 bids in Q1 2022.

Issuance was lumpy in July, with three weeks of $10 billion issuance sandwiched between lower issuance due to the Fourth of July holiday at the start of the month and the FOMC meeting the last week.

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.