Municipal market participants are preparing and bracing for a market without advance refundings and perhaps private activity bonds as major tax changes draw closer. Municipal issuers are coming together and giving the market one last gasp of these types of bonds before they are no longer allowed to do so and in the process, have created what could potentially be a historic $17.4 billion of issuance.

VOICEOVER: The Senate’s passage of its tax bill by a 51 to 49 vote early Saturday sets the stage for a sea change in the municipal market once it’s reconciled with the House’s version and signed into law. The fate of private activity bonds, which would be spared in the Senate bill but killed in the House measure, hangs in the balance.

With advance refundings eliminated in both bills, that popular cost-saving tool for municipalities is all but dead. Issuers continue to line up in droves to get these types of deals done while they can, and are expected to keep rushing in from now until the end of the year.

An estimated $17.4 billion of new issuance is expected to hit the market this week, in what may be a record-setting volume week. Buyers are also trying to beat the clock as they want to purchase these types of bonds before the well dries up in 2018.

I’m Aaron Weitzman, and this has been your Muni Minute.