Municipal bond issuance surged past the $500 billion mark to a record in 2024, as infrastructure spending needs and election-related concerns unleashed a slew of mega deals.
The muni market produced $512.7 billion of debt issuance in 2024, up 33.1% from $385.1 billion in 2023, according to LSEG data. This surpasses the
Most firms believed volume would rise year-over-year in 2024, after
However, the
None, though, predicted issuance would top 2020's and 2021's record levels, let alone surpass $500 billion. As issuance continued to surge during the second half of the year, however, market participants realized that might be a real possibility.
Infrastructure upgrades accounted for some of the surge in issuance.
The stimulus money provided in 2021 and 2022 meant municipalities and issuers did not have to issue bonds to fund their operations as there was plenty of cash on hand, said Chris Brigati, managing director and chief investment officer of SWBC.
"They built up cash reserves because they received stimulus money and had other sources of revenue from which they could fund operations, but with federal aid drying up, issuers had to tap the market to address their infrastructure needs, Brigati said.
The summer months proved to be strong months for issuance with little drop-off. That helped push total issuance numbers to "further heights" throughout the year, riding the wave through the end of October, which Brigati noted boasted the largest monthly issuance figure at $66.29 billion.
October's surging issuance following the pattern of an influx of supply the month before the presidential cycle as seen in 2016 and 2020.
"The October number this year had everything to do with how the election was playing out, and unknowns related to that," said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital.
Some issuance was also pulled forward ahead of the presidential election in November as market participants wanted to avoid any election-related volatility, which ended up being short-lived, Brigati said.
"Issuers, like everyone else, dislike uncertainties, so they tend to want to lock in something when they know what they're getting," he said. "And even though rates were higher at some points during the year, the issuers were still saying, 'Well, let me at least lock this in before we get to the uncertainty around the election.'"
Additionally, mega deals such as Jefferson County's $2.275 billion of sewer revenue bonds and Brightline's $2.3 billion recapitalization gained prominence this year as issuers no longer hesitated to bring billion-dollar-plus deals to market, Olsan said.
The number of mega deals has grown over the years, Olsan said. Ten years ago, it was unclear how they would be received. Last year proved the market's acceptance. "You have a lot of liquidity in those deals, and so it can bring in a larger group of buyers," Olsan said.
Most of the year's larger deals, excluding the Brightline deal, were "well into investment grade, so it isn't much of a credit impact once you get to that deal size," she added.
Tax-exempt issuance increased 36.8% to $449.492 billion in 8,214 issues from $328.536 billion in 7,164 issues in 2023.
Taxable issuance dipped 4.7% to $37.93 billion in 873 issues from $39.821 billion in 830 issues the previous year. Alternative minimum tax issuance rose 51.3% to $25.28 billion from $16.71 billion.
New-money issuance rose 20.5% to $359.943 billion from $298.784 billion in 2023. Refundings were up 64.9% to $85.172 billion from $51.646 billion.
Issuance of revenue bonds increased 46.9% to $345.26 billion from $235.03 billion in 2023, and general obligation bond sales rose 11.6% to $167.44 billion from $150.04 billion in 2023.
Negotiated deal volume was up 40.4% to $409.62 billion from $291.71 billion a year prior. Competitive sales increased 20.3% to $86.3 billion from $71.74 billion in 2023.
Deals wrapped by bond insurance increased 29% to $41.09 billion in 1,681 deals from $35.36 billion in 1,399 deals a year prior.
Bank-qualified issuance ticked up 2.3% to $8.736 million in 2,214 deals from $8.543 million in 2,206 deals in 2023.
In the states, California accounted for the most volume in 2024.
Issuers in the Golden State sold $71.84 billion, a 31.9% increase year-over-year. Texas came in second with $68.13 billion, up 15.5% year-over-year, and New York was third with $58.83 billion, up 39.1%. Florida came in fourth with $27.53 billion, up 103.6%, and Illinois rounds out the top five with $17.42 billion, a 21.2% increase from 2023.
The rest of the top 10 are: Pennsylvania with $16.49 billion, up 36.3%; Massachusetts with $14.53 billion, up 67.5%; Washington with $13.875 billion, up 47.9%; Alabama at $13.57 billion, up 81.9%; and New Jersey with $12.83 billion, a 68.6% increase from 2023.
