No Municipal Debt Binge, and There Won’t Be One

  • There is a misconception about the quantity of municipal bonds issued in recent years. Municipal bond issuance flatlined relative to the growth we saw in federal and corporate debt over the last ten years.

  • The new fiscal reality after the Great Recession contributed to the lack of municipal bond issuance.

  • Many observers were surprised in the early part of the last decade when new money municipal bond issuance did not return close to pre-Great Recession levels. Those with an intimate understanding of what public finance entities had gone through and were experiencing even up to the Pandemic Recession were not surprised at all.

  • Deficit financings will remain uncommon. Some may occur selectively, but we do not think they will occur in an amount that will be meaningful enough to influence overall issuance levels.

  • Balanced budget requirements and state and federal limitations on the use of proceeds municipal entities are allowed to sell debt for have been, and will continue to be, major influencing factors that will keep municipal issuance from rising substantially, if at all.

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