March issuance remained robust as dwindling pandemic aid, growing infrastructure needs and policy uncertainty from Washington, D.C., led issuers to tap the muni market.
March's volume was $41.385 billion in 685 issues, up 7.2% from $38.617 billion in 573 issues in the same period in 2024, according to LSEG data.
Last year set a record for supply, and with volume up 14.5% in the first quarter year-over-year, 2025 remains on a path to break the record, said Kyle Javes, a managing director and head of municipal fixed income at Piper Sandler.
"Everybody has a robust pipeline. It seems like hitting last year's volumes should be within the strike zone for the marketplace," he said.
Currently, issuers have passed the period of "ample cash and/or COVID money that they've been able to live on," said Chris Brigati, managing director and chief investment officer at SWBC.
That ended a while ago, so issuers have started ramping up their borrowing as they deal with higher costs and prices, putting more pressure on their budgets, he said.
The market, Javes noted, is on this "post-COVID path" of capital investment.
The market has seen capital expenditures across a variety of munis sectors, including school districts, housing and higher education, as the "broad-based capital planning and capital expenditures is a hangover from the COVID, where everybody was in survival mode, and now we're in strategic capital expenditure mode," Javes said.
Long-awaited infrastructure needs compound the issue, as issuers have to deal with infrastructure maintenance and improvements. And as the cost of these projects rises, issuers have to issue more debt to pay for them, he said.
"There's not any sector that's not looking to borrow at the moment," Javes said.
Another big theme this year has been the uncertainty about what the Trump administration may or may not do, leading the overall market to be flooded with issuance as issuers try to borrow before possible rule changes.
One of the big unknowns is the potential elimination of the tax exemption, which, if it comes to fruition, would increase issuer borrowing by $824 billion over the next 10 years, according to a Government Finance Officers Association analysis.
"The market, the investors, are on their heels a bit and are willing to wait and see what happens," Javes said.
Along with the uncertainty in Washington, D.C., investors took a cautious approach in March for a variety reasons, and therefore, dialed back their participation, especially in the secondary market, Brigati said.
"So the primary market was more attractive, generally speaking, so a lot of investors could get bonds and get filled on primary deals," he said.
However, the deals were not heavily oversubscribed; some deals had to be cut or adjusted to get placed, making them even more attractive for investors, Brigati noted.
Overall, the influx of issuance has led BofA Securities to revise its 2025 issuance forecast upward to $580 billion from $520 billion.
March issuance, while lower than BofA's original forecast of $45 billion, is still higher than March 2024, BofA strategists said.
"We believe once the market gets past the March/April seasonal weakness, issuance will regain the torrid pace we saw in January and February," they said.
March issuance details
Tax-exempt issuance in March was at $37.553 billion in 620 issues, up 4.3% from $36.019 billion in 509 issues a year ago. Taxable issuance rose 2.2% to $2.151 billion in 58 issues from $2.104 billion in 59 issues in 2024. AMT issuance was $1.681 billion, up 240.2% from $494.3 million in 2024.
New-money issuance rose 35.2% to $31.8 billion from $23.525 billion, while refundings fell 58.4% to $4.565 billion from $10.981 billion.
Revenue bond issuance increased 7.8% to $27.009 billion from $25.047 billion in March 2024, and general obligation bond sales increased 5.9% to $14.376 billion from $13.571 billion in 2024.
Negotiated deal volume was down 10.1% to $29.675 billion from $33.023 billion a year prior. Competitive sales surged 233.3% to $11.632 billion from $3.49 billion in 2024.
Bond insurance dropped 5.7% to $2.27 billion from $2.407 billion.
Bank-qualified issuance rose 16.8% to $631 million in 147 deals from $540.4 million in 147 deals a year prior.
In the states, the Golden State claimed the top spot year-to-date.
Issuers in California accounted for $18.989 billion, up 27.1% year-over-year. New York was second with $13.981 billion, down 15.7%. Texas was third with $12.373 billion, down 2%, followed by Florida in fourth with $5.821 billion, up 55.6%, and Ohio in fifth with $4.39 billion, a 340% increase from 2024.
Rounding out the top 10: Pennsylvania with $4.217 billion, up 59.9%; Wisconsin with $4.19 billion, up 36.2%; Alabama with $3.976 billion, down 11.3%; Colorado with $3.625 billion, up 49.5%; and Massachusetts with $3.607 billion, down 25.3%.
