icon
icon
icon
icon
🏷️$300 Off
🏷️$300 Off

News /

Articles /

Muni Sales Surge Ahead: A $520 Billion Wave in 2025

Eli GrantWednesday, Dec 4, 2024 2:17 pm ET
4min read


Municipal bond analysts are forecasting a record-breaking year for state and local government debt issuance in 2025, with projections estimating sales to reach over $520 billion. This surge in municipal bond (muni) sales is expected to be driven by refunding candidates and infrastructure spending, as borrowers take advantage of lower interest rates and prioritize capital projects.

Bank of America, the largest underwriter in the muni-bond market, anticipates a record sum of $520 billion in debt sales next year, revising their previous forecast from $400 billion to $460 billion for 2024. This projection aligns with other analysts' expectations, such as FHN Financial, who see even more supply on the table due to refunding candidates and capital project spending.

Refunding candidates and infrastructure spending are expected to significantly drive municipal bond issuance in 2025. According to FHN Financial strategists Abigail Urtz and Ryan Henry, refunding candidates are up, indicating that issuers will take advantage of lower interest rates to refinance existing debt. Simultaneously, spending for capital projects is anticipated to maintain a brisk pace, ensuring infrastructure keeps up with first-world standards. This convergence of factors is poised to propel municipal bond sales past $500 billion in the upcoming year.



The increase in muni sales will have implications for interest rates, yields, and investor demand in 2025. As supply increases, demand may outpace issuance, keeping yields relatively stable. However, if issuance exceeds demand, yields may rise, affecting both new and existing bond prices. Interest rates could also be influenced by the Federal Reserve's policy, potentially leading to higher yields if rates are hiked. This could create opportunities for investors seeking tax-advantaged income, as muni yields could remain attractive.

Investors should monitor market conditions and maintain a balanced portfolio to navigate potential changes in 2025. The shift in investor demand towards higher-yielding municipal bonds due to increased supply and attractive tax-equivalent yields will likely lead to a change in portfolio composition. Investors may increasingly favor actively managed strategies that offer more flexibility in duration management and credit selection. This could result in higher exposure to medium to lower-grade credit, which currently offers attractive after-tax income opportunities. While this may enhance returns, it could also introduce additional risk.

BBAI, CVKD, SMR, NVTS, BTDR...Market Cap, Turnover Rate...


In conclusion, the municipal bond market is expected to experience a significant surge in issuance in 2025, with analysts forecasting sales to reach over $520 billion. This increase in supply, driven by refunding candidates and infrastructure spending, will have implications for interest rates, yields, and investor demand. Investors should stay informed about market conditions and adapt their portfolios accordingly to capitalize on the emerging opportunities in the muni bond market.
Comments

Add a public comment...
Post
User avatar and name identifying the post author
2strange4things
12/04
Refunding candidates are the real MVPs here.
0
Reply
User avatar and name identifying the post author
moneymonster420
12/04
Bank of America calling $520B shot, bold move.
0
Reply
User avatar and name identifying the post author
Ok_Secret4642
12/04
Bank of America's muni-bond forecast is bullish. Time to load up on some tax-free gains? 🤑
0
Reply
User avatar and name identifying the post author
Regime_Change
12/04
Bank of America's bullish on munis, but watch out for rising rates. Diversify, diversify, diversify.
0
Reply
User avatar and name identifying the post author
Big-Decision-1458
12/04
Fed hikes = muni yields up, watch out.
0
Reply
User avatar and name identifying the post author
CaseEnvironmental824
12/04
Infrastructure spending = big bucks for muni market
0
Reply
User avatar and name identifying the post author
notbutterface
12/04
Muni bonds looking juicy with low rates around.
0
Reply
User avatar and name identifying the post author
911Sheesh
12/04
Muni bonds could be a sweet spot for tax-advantaged income. Keep an eye on credit quality though.
0
Reply
User avatar and name identifying the post author
TrendTracker
12/04
🚀 Muni market rocketing, buckle up, folks!
0
Reply
Disclaimer: The news articles available on this platform are generated in whole or in part by artificial intelligence and may not have been reviewed or fact checked by human editors. While we make reasonable efforts to ensure the quality and accuracy of the content, we make no representations or warranties, express or implied, as to the truthfulness, reliability, completeness, or timeliness of any information provided. It is your sole responsibility to independently verify any facts, statements, or claims prior to acting upon them. Ainvest Fintech Inc expressly disclaims all liability for any loss, damage, or harm arising from the use of or reliance on AI-generated content, including but not limited to direct, indirect, incidental, or consequential damages.
You Can Understand News Better with AI.
Whats the News impact on stock market?
Its impact is
fork
logo
AInvest
Aime Coplilot
Invest Smarter With AI Power.
Open App