In January 2025, the municipal bond market experienced a notable surge in new issuances, totaling approximately $36.3 billion. This represents roughly a 20% increase compared to the same period in the previous year.
These new deals came "priced to sell" to attract buyers.
The top 20 bond financings in January collectively amounted to over $15 billion. The leading issuances included:
- Triborough Bridge & Tunnel Authority: $1.6 billion
- Regents of the University of California: $1.5 billion
- Oklahoma Turnpike Authority: $1.26 billion
- Columbus Regional Airport Authority: $1.21 billion
- San Francisco City & County Airport Commission: $1.01 billion
We anticipate that 2025 will see increased municipal bond issuance, driven by infrastructure needs, deferred maintenance, and getting ahead of possible "headline" risk as we approach the December 2025 sunset of the TCJA (Tax Cuts and Jobs Act). Going into the congressional negotiations over making the TCJA permanent, expect market gyrating headlines which could make new MuniBond issuance difficult.
Traditionally, January sees lower issuance compared to other months. The street anticipates 2025 supply to range between $500-$525 billion, a 2%-6% increase compared to the record setting year 2024.
Municipal fund flows in January 2025 were materially stronger (2x) vs. January last year as investors hit the typical January reset, seeking to put capital to work. The month of January averages the strongest month for inflows – having posted the highest monthly flows in 6 of the last 15 years and ranking 3rd or better in 10 of 15 years. Constructively, fund flows YTD have been strong across fund types, with MFs (+$2.8bn), ETFs (+2.1bn) and HY ($1.8bn) all posting healthy flows in January.
Robust supply being met with strong demand evidences a healthy market kicking off 2025.
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