Bond volume

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.

Municipal bond issuance in the Lone Star State totaled $59 billion in 2023, spurred by utility rate securitizations and school bonds.

With a high of $450 billion and a low of $330 billion, no firms currently see issuance surpassing the records hit in 2020 and 2021.

November's total volume rose 7.8% to $28.464 billion in 652 issues. For volume to top total 2022 issuance, December would need to see $44.329 billion of issuance.

"The lack of standardization is a very real problem that impacts all facets," said Ted Chapman, managing director and investment banker at Hilltop Securities.

October's total volume rose 29.3% to $37.156 billion in 661 issues from $28.738 billion in 614 issues a year earlier. New-money grew more than 30% while refundings were up by nearly 75%.

As valuations got richer after muni outperformance this week, Barclays strategists expect munis to be "truly tested in the next several weeks, with supply picking up."

September's total volume ticked up 1.2% to $27.585 billion in 531 issues from $27.251 billion in 592 issues a year earlier. However, the month's total is lower than the $30.652 billion 10-year average, according to Refinitiv data.

Data for the second quarter show the face amount of munis outstanding rose 0.4% quarter-over-quarter, or $15.5 billion, to $4.043 trillion.

Despite this, August saw the largest monthly volume of 2023, helped by several billion-dollar deals and multiple Texas school district deals.

Municipal bond issuance in the Far West was down 2.3% in a first half that saw volume drop 17.1% nationally.

The region's issuers sold $30.3 billion of municipal bonds in the first half of 2023, 29.9% less than they did during the same period last year

Healthcare and transportation had the biggest contraction in issuance volume.