Bank of America Expects Muni-Bond Supply to Rebound in October, Forecasts $58 Billion in Debt Sales

Bank of America expects a rebound in municipal bond supply in October, forecasting $58 billion in debt sales, after a slowdown in state and local government borrowing this month. The market is expected to resume its busy pace of debt sales, with interest rates staying "sideways" in October. Muni-bond issuance is running 15% higher than last year, with a forecast of $580 billion in 2025.

Bank of America Corp. strategists led by Yingchen Li and Ian Rogow have forecasted an increase in municipal bond issuance in October, after a slowdown in state and local government borrowing this month. The firm, which is the top underwriter of state and local debt, expects $58 billion in municipal issuance for the month of October Bank of America Expects Muni-Bond Supply to Rebound in October^[1].

Muni bond sales are on track to fall about 6% this month compared to the prior year, with issuance totaling $44 billion so far. Some municipalities may have held off on borrowing in September in the hopes that the Federal Reserve would cut interest rates. The Bank of America strategists predict that the market will resume its busy pace of debt sales in October, with interest rates staying "sideways" Bank of America Expects Muni-Bond Supply to Rebound in October^[1].

Li said in an interview that the market will likely be in a holding pattern during the first two weeks of October until September inflation data is released on October 15. After October, the Bank of America strategists expect supply to decline from October levels, forecasting $46 billion and $47 billion of issuance in November and December, respectively Bank of America Expects Muni-Bond Supply to Rebound in October^[1].

Muni-bond issuance is running about 15% higher than the pace last year, which produced a record annual borrowing wave. Bank of America’s strategists are forecasting $580 billion of muni sales in 2025, up from last year Bank of America Expects Muni-Bond Supply to Rebound in October^[1].

The market has "no problem" absorbing the supply, according to Li. India, on the other hand, is set to auction a fresh 10-year government bond on October 3 to raise 320 billion rupees ($3.6 billion) India to sell new 10-year government bond on October 3 to raise $3.6 bn^[2].

References
Bank of America Expects Muni-Bond Supply to Rebound in October^[1] https://www.bloomberg.com/news/articles/2025-09-29/municipal-bond-market-bank-of-america-expects-supply-to-pick-up-in-october
India to sell new 10-year government bond on October 3 to raise $3.6 bn^[2] https://www.business-standard.com/finance/news/india-to-sell-new-10-year-government-bond-on-october-3-to-raise-3-6-bn-125092901368_1.html