The municipal bond market saw the lowest monthly issuance total of the year in November, but that did not stop this year’s total volume passing 2019’s and all but confirms 2020 will end with a new record.
Muni bond issuance took a nosedive in November to the tune of $18.84 billion in 735 deals, much lower than the $47.31 billion in 1,193 transactions in November of 2019.
Even with the sudden slow-down in volume this past month, 2020 volume stands at $440.83 billion in 11,892 transactions. There was $426.34 billion in 11,594 issues in 2019. The record for yearly volume is $448.61 billion, that was set back in 2017. This week alone is near $8 billion.
“November issuance activity was entirely expected,” according to Tom Kozlik, head of municipal strategy and credit at Hilltop Securities. “The lower level was mostly due to the fact that issuers were rushing to complete financings before the 2020 elections. However, the fact that there were two mid-week holidays did not help either. I do not think that the third wave of COVID has played into the November calendar and I do not think that it will drastically impact the December calendar either.”
“We expect December will also be below average,” Kozlik said. “Expecting much more than a below average month could be an aggressive expectation.”
Looking ahead to next year, Kozlik anticipates issuance to drop in 2021, just like it did in 2011 and 2018.
“This time it could take some time, probably measured in years and not months,