Issuance in February remained strong despite only ticking up slightly year-over-year.
February's volume was at $33.725 billion in 622 issues, up only 1.6% from $33.191 billion in 614 issues in 2024, according to LSEG data.
While issuance in February is essentially flat, supply remains strong in 2025, said David Litvack, a tax-exempt strategist at BofA.
Last year was a very strong year for issuance, as it broke records and topped $500 billion-plus, so even "that we're ahead even by a small amount speaks to a robust issuance market," he noted.
The slight tick up in supply in February, compared to the 10.8% rise in issuance in January year-over-year, could be a factor of timing, said Matt Fabian, a partner at Municipal Market Analytics.
There was the holiday-shortened week toward the end of the month, and the constant onslaught of news coming out of Washington, D.C., every few days was "chaotic and destabilizing," he said.
There was also an overhang from the California wildfires, which proved to be a setback for the state's government, in particular, Fabian said.
Supply this year, though, will remain robust, Litvack said.
Issuers "deferred" infrastructure needs from 2021 to 2023, he noted.
During that time, issuers were hesitant to issue more debt because they could fund their capital needs with pandemic aid and other internal funds, and they were concerned about the economy's trajectory, according to Litvack.
However, with COVID-era money drying up and infrastructure needs having to be addressed, that will lead to issuers taking to the capital market, he said.
Interest rates are also coming down, Litvack noted.
"To the extent that rates are coming down, that could spark an increase in refunding activity in upcoming months," he said.
The essentially flat figure year-over-year does not dissuade Fabian from believing issuance in 2025 will be at least $500 billion, as he initially predicted.
"Municipal issuance is always lumpy, and it's hard for issuers to accelerate bond issues, according to risks in the market," he said. "But we're talking about a lot of issuance: half a trillion dollars of supply. One month of not surging issuance doesn't interrupt overall expectations."
If anything, the threat to the tax exemption is as high as ever, meaning the market may see an influx of issuance ahead of any full or partial elimination, according to Fabian.
February issuance details
Tax-exempt issuance in February was at $30.46 billion in 558 issues, nearly flat posting just a 0.3% decrease from $30.567 billion in 552 issues a year ago. Taxable issuance rose only 1.9% to $2.483 billion in 61 issues from $2.436 billion in 57 issues in 2024.
New-money issuance dipped 2.5% to $24.403 billion from $25.018 billion, while refundings fell 29.7% to $4.5 billion from $6.393 billion.
Revenue bond issuance increased 4.7% to $22.001 billion from $21.02 billion in February 2024, and general obligation bond sales fell 3.7% to $11.742 billion from $12.171 billion in 2024.
Negotiated deal volume was up 6.8% to $26.655 billion from $24.96 billion a year prior. Competitive sales increased 6.3% to $7.044 billion from $6.627 billion in 2024.
Bond insurance dropped 19.7% to $1.985 billion from $2.471 billion.
Bank-qualified issuance fell 2.2% to $575 million in 148 deals from $587.9 million in 143 deals a year prior.
In the states, the Lone Star State claimed the top spot year-to-date.
Issuers in Texas accounted for $9.254 billion, up 8.4% year-over-year. California was second with $9.247 billion, up 11.5%. New York was third with $5.709 billion, down 17.5%, followed by Florida in fourth with $5.088 billion, up 188.5%, and Ohio in fifth with $3.109 billion, a 512% increase from 2024.
Rounding out the top 10: Alabama with $2.951 billion, down 24.7%; Colorado with $2.637 billion, up 144.7%; Pennsylvania with $2.518 billion, up 44.9%; Massachusetts with $2.11 billion, down 52.4%; and Washington with $2.012 billion, up 6%.
