Municipal bond issuance in the Far West region in 2024 reflected a national boom, rising 30.8% year-over-year to $98.96 billion, according to LSEG data, spurred by infrastructure spending and fear over potential changes post-election.
"There was a theme for the majority of the year of people pushing out debt before the election," said Raul Amezcua, a senior director at Ramirez & Co.
"There was no question we got a bump in the later part of Q3 and early part of Q4 because of uncertainty around the election," said Justin Cooper, leader of Orrick, Herrington & Sutcliffe's finance sector and co-head of its public finance practice. "Capital markets like predictability."
The trend in the Far West follows the nation, which saw
The Far West demonstrated strong sales each quarter, but third quarter volume soared, topping the prior year by 45.6% to notch $27.6 billion in sales.
"It wasn't even a question of who would win [the presidential election], but more, no matter who wins, 'What if we are in litigation for months and months, because of challenges to the election results?' or 'What if there are riots in the streets?'" Amezcua said.
"We were tracking that for months in advance," Amezcua said. "It was a concern for many people in the market, and certainly the market accelerated deals to get in front of the election."
California led the region, with its issuers generating $71.6 billion in sales trailed by Washington at $13.7 billion.
The California state government sold $13.3 billion in new money long-term debt (both general obligation and revenue bonds) in 2024 compared to $9.7 billion in 2023, according to data provided to The Bond Buyer by the state treasurer's office. The state refunded $7.35 billion in 2024, compared to $7.16 billion in 2024, according to the STO.
Bond issuance for California could also continue to trend up in 2025, "driven by large bond authorizations approved by voters in November 2024: $10 billion for construction and modernization of public education facilities and $10 billion for various water, energy, and environmental projects," wrote Roman Schuster, a research analyst for Lord & Abbett's municipal bond research team,
The Far West's biggest deal in 2024 was $2.9 billion in Los Angeles Unified School District general obligation bonds priced by BofA Securities, Jefferies and RBC Capital markets fin April.
After that came $2.6 billion in State of California GOs priced by JP Morgan and Wells Fargo in March and $1.55 billion in Washington refunding GOs priced by BofA Securities in October.
Issuance boomed throughout Washington state, with a 45.8% increase over 2023's volume. Idaho was also notable with a 64.3% increase in sales volume to $2.1 billion to secure the slot as the region's fifth-largest issuer, trailing California, Washington, Oregon's $4.2 billion and Nevada's $3.9 billion.
Alaska saw the biggest percentage gain, with volume more than tripling to $1.2 billion.
In the entire region new money volume increased 9% to $57.8 billion, while refundings nearly doubled to $25.3 billion from $13.9 billion and deals LSEG classified as combined new money/refunding increased to $15.8 billion from $8.7 billion.
In addition to the election's effect on sales volume, acceptance that the days of
"From second quarter 2022 to sometime last year, there was some sticker shock on interest rates and people finally got over that and resigned themselves to the fact the era of free money had ended and they were now in an era where they would have to pay for their money," Cooper said.
The slowdown on deferred maintenance and construction projects during that time frame was partly related to the sticker shock on interest rates, Cooper said.
"Capital needs and deferred maintenance back logs didn't abate when bond issuance fell off," he said.
"When you look at volume in 2024 and expectations for 2025 it's largely driven by infrastructure," Amezcua said. "There is a lot of pent up demand for infrastructure and people are moving forward with capital improvement programs. I am working on some large deals that are largely all new money."
Capital improvement projects took a backseat after COVID-19 hit in 2020, and then came the spike in inflation and increased construction costs, which resulted in a slowdown in debt issuance for capital programs, Amezcua said.
Fast forward to 2024, and issuers started pushing out capital improvement plan debt, he said.
Hot sectors for issuance, Cooper said, have been housing, healthcare, land-secured finance and land-secured development deals.
"The need exists for transportation, but the transit systems have not recovered from the pandemic to the extent they can afford to issue debt," he said. "They need money, but they are not in a great position to borrow."
Deals LSEG classified as education were the region's biggest sector with $25.6 billion sold in 2024, compared to $19.7 billion a year earlier. Electric power bonds totaled $15 billion in 2024 compared to $10 billion in 2023 and transportation issuance hit $12.2 billion compared to $7.2 billion in 2023, according to LSEG.
Healthcare sector volume in the Far West almost tripled to $5.97 billion.
While the spend down of pandemic-era federal funding propelled issuance in 2024, Amezcua said, Ramirez is expecting it to be more of a driver of bond volume in 2025.
Other drivers, specific to the region, Amezcua said, included the jump in refundings.
The boost in refundings is likely related to premium bonds issued in 2015, because debt gets refunded when it hits the 10-year call, Cooper said.
"I don't entirely know, but I suspect it may be related to that," Cooper said. "If those bonds issued ten years ago had been sold as par bonds, they wouldn't be as attractive to refund as a premium bond."
BofA Securities secured the Far West's top underwriting ranking, credited by LSEG with $19.4 billion in 93 issues, followed by Morgan Stanley with $10.5 billion in 48 issues and JP Morgan Securities with $9.7 billion in 60 issues.
PFM Financial Advisors topped the financial advisor rankings in the region, credited with $20.9 billion in 114 issues; Public Resources Advisory Group followed with $18.15 billion in 33 issues and KNN Public Finance had $9.7 billion in 71 issues.
Orrick, Herrington & Sutcliffe continued its long reign atop the Far West bond counsel tables, credited with $38.8 billion in 222 issues, followed by Stradling Yocca Carlson & Rauth with $11.5 billion in 158 issues and Hawkins Delafield & Wood with $8.8 billion in 57 issues.
The region's top issuer was the California Community Choice Financing Authority, credited with $9 billion of par on 11 issues. In second was the California state government, with $8.4 billion on 16 deals.
