Issuance rises 14.3% in 1H; June up 16.3%

Supply surged during the first half of the year as issuers tapped the capital markets en masse week after week to get ahead of potential concerns, like changes to or elimination of the tax exemption, threats to funding for private universities and volatile market conditions.

Issuance during the first half of the year is at $280.638 billion, up 14.3% year-over-year from 2024. Issuance in June increased 16.3% to $56.805 billion from $48.843 billion last June.

Issuance this year has been “relentless,” with the constant onslaught beginning at the start of the year, while historically the “new-issue machine” takes a while to get rolling, said Scott Diamond, co-head of AM Municipal Fixed Income at Goldman Sachs.

However, this year was different, as the momentum from 2024 carried over into the start of 2025, and it’s been “impressive” ever since, he said.

Week after week, saw elevated issuance, with an average of $10 billion to $12 billion of supply per week, up from several years ago when the average was $6 billion to $8 billion, according to Diamond.

There are even weeks that surpass the new average, with issuance surging to nearly $20 billion during two separate weeks in June. Each was among the largest in terms of volume on record.

Not every week, though, boasted robust supply, as several weeks in April saw very little.

During April, the massive tariff-induced volatility led many deals to be postponed or moved to the day-to-day calendar.

However, even that month was able to eke out positive gains because massive selling didn’t occur, Diamond said.

“The retail buyer base, who owned the vast majority of our asset class, were not looking for the exits,” he said.

Additionally, the market is in a higher interest rate environment now, “so you’re back to where you’re clipping a good 30 to 40 basis points of income on a monthly basis,” Diamond said. “That buys you a little bit of a cushion to protect you if there’s a little bit of a downdraft.”

Part of the record influx of issuance came from issuers frontloading and accelerating deals ahead of potential concerns.

“There were a lot of headlines and a lot of discussion about the [tax] exemption being at risk,” said Pat Luby, head of municipal strategy at CreditSights. “But here we are, and year-to-date, volume is ahead of last year’s record.”

While concerns arise about the possible elimination of the tax exemption every time a president is elected, the likelihood of it being repealed was slightly increased this time around. What was more likely was that parts of the tax exemption were targeted, such as private-activity bonds and issuers like airports, hospitals, and private universities.

Now, those risks seem to have evaporated as the exemptions were untouched in the version of a massive tax and spending bill that passed the House last month while the Senate continues debate of its final version, Luby said.

Additionally, the education sector has experienced an influx of deals from prestigious and well-known universities as these elite universities came to market amid the Trump administration’s funding freezes and slashed research budgets.

The sector’s borrowing is up by more than the broader market year-to-date, Luby said,

Furthermore, the market has been very volatile this year, so whenever market conditions are favorable, issuers are more likely to “price a deal as soon as they think they have a sense of positive reception from the market,” Diamond said.

“We’re going to accelerate and price it today just to get it done and out of the way,” he said.

The surge in supply during the first half of the year has led some market participants to revise their initial forecasts upward.

Matt Fabian, a partner at Municipal Market Analytics, recently noted issuance could reach $600 billion this year after originally forecasting supply at $500 billion with some upside.

BofA Securities revised its forecast to $580 billion from $520 billion, while J.P. Morgan also raised its issuance prediction, to $560 billion from $490 billion.

Barclays, which initially predicted around $480 billion of issuance, now expects supply for 2025 to be between $530 and $540 billion.

At the end of last year, CreditSights predicted 2025 would see about $550 billion in issuance.

Now, with more than half of the projection already reached, Luby said, “There’s nothing that makes me concerned that it’s going to stop.”

June issuance details
Tax-exempt issuance rose 27.8% to $53.428 billion in 831 issues from $41.797 billion in 779 issues a year ago. Taxable issuance dropped 29.4% to $2.185 billion in 86 issues from $3.095 billion in 97 issues in 2024. AMT issuance was $1.192 billion, down 69.8% from $3.952 billion in 2024.

New-money issuance rose 19.2% to $41.55 billion from $34.869 billion, while refundings increased 21.5% to $7.546 billion from $6.21 billion.

Revenue bond issuance increased 10.2% to $36.983 billion from $33.571 billion in June 2024, and general obligation bond sales rose 29.8% to $19.822 billion from $15.272 billion in 2024.

Negotiated deal volume was up 17.9% to $44.914 billion from $38.095 billion a year prior. Competitive sales rose 20.5% to $11.355 billion from $9.427 billion in 2024.

Bond insurance rose 18.4% to $4.712 billion from $3.98 billion.

Bank-qualified issuance increased 11.9% to $953.9 million in 218 deals from $852.7 million in 213 deals a year prior.

California claimed the top spot year-to-date among states.

Issuers in the Golden State accounted for $45.58 billion, up 25.9% year-over-year. Texas was second with $30.5 billion, down 7.7%. New York was third with $30.023 billion, up 6.4%, followed by Florida in fourth with $10.147 billion, down 18.6%, and Pennsylvania in fifth with $9.819 billion, an 88.5% increase from 2024.

Rounding out the top 10: Massachusetts with $8.38 billion, down 16.4%; Michigan with $7.776 billion, up 53.3%; Colorado with $7.58 billion, up 35.9%; Illinois with $6.942 billion, up 10.3%; and Wisconsin with $6.853 billion, up 25.6%.