Municipal borrowing for new projects has reached a 10-year high so far in 2022 while refinancing has fallen to a 10-year low.
State and local governments sold a total of $292 billion in muni bonds through Sept. 30, above the ten-year average of $281 billion, according to data from Refinitiv. About $234 billion of the debt this year was tax-exempt, exactly the ten-year average.
Flush with cash from last year’s tax revenues and Covid-19 stimulus payments, cities and school districts are digging sewers and building high schools despite higher borrowing costs. Municipal bond issuance for new projects rose to $238 billion in the first nine months of the year up from $227 billion for the same period in 2021.
Refinancing deals have fallen by roughly half from last year to $55 billion, however, as rising rates make the math unappealing. A benchmark ten-year triple-A bond carries a yield of 3.24% as of Oct. 3, compared to 1.14% a year earlier, according to Refinitiv MMD.
The Wall Street Journal
By Heather Gillers
Oct 4, 2022