Munis

The municipal bond market gets sucked further into the culture wars with Florida's latest plan to ban issuers from considering ESG factors when issuing debt.

A substantial drop in new money volume sets California and the Far West apart from the the country.

"The board's arguments are bad for the future of infrastructure financing in the United States," Oversight Board member Justin Peterson said.

Spending on climate proofing infrastructure and other green capital developments increased 68% while overall volume tumbled 13% in the region.

"We urge you to use rescue plan money to make your community safer," Biden said. "Invest in affordable housing, get small businesses back on their feet, train your workforce." 

Rating analysts said dropping reserves to 0.25% from 5% to free up capacity does not impact the school bond guarantee program's triple-A ratings.

Midwest borrowing last year went from 11% year-over-year growth in the first quarter to a 48% plunge in the fourth quarter.

Muni issuers are staunchly opposed to what they characterize as an unfunded mandate that provides limited benefits.

A reduction in the program's reserves and February debt payments and maturities of outstanding guaranteed bonds will increase capacity by $7 billion to $9 billion.

Rising interest rates depressed refunding opportunities, but new money issuance rose amid demand for infrastructure to serve the region's growing population.

With $300 million of term bonds due in 2051 underperforming in secondary market trading, Kansas officials are eyeing a surplus revenue funded buyback plan.

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.

An initial toll corridor would require $8.5 billion in upgrades, which would be financed by a new bond credit under a plan under consideration by Michigan lawmakers.

"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.

Translating bipartisan support for infrastructure funding into support for long-term financing is a key lobbying goal for the municipal bond market.

Despite its nearly drained capacity, the Texas Permanent School Fund program continues to operate as it seeks legislative and regulatory solutions to a federal cap.

A financial instrument that has appealed to many municipalities to remedy underfunded pension plans is once again looking like a losing borrow and bet scheme.

A panel of experts at The Bond Buyer's National Outlook Conference discussed the opportunities surrounding ESG for both investors and issuers.