- July deals oversubscribed by 5.2 times on average: BlackRock
- New muni debt sales year-to-date are slowest since 2019
A reluctance by states and cities to borrow is making municipal debt a star performer among credit assets and driving investors to scour the market for bonds.
Municipalities issued $218 billion of long-term debt year to date, 9% less than at the same point last year and the slowest pace of sales since 2019, according to data compiled by Bloomberg. The Federal Reserve’s interest-rate increase regime since March 2022 to fight inflation at least partly explains the dropoff.
The scarcity is fueling outperformance in the asset class. Municipal bonds returned 0.4% in July, better than a 0.35% decline in US Treasuries, according to data compiled by Bloomberg. Month to date, munis lost 0.8%, less than Treasuries and corporates, which lost 1.2% and 1.8% respectively.
Bloomberg Markets
By Nic Querolo and Amanda Albright
August 15, 2023