Muni Market’s Rough Month Roils Some Borrowing Plans

The municipal-bond market experienced its weakest month in more than two years, prompting some issuers to delay or shrink deals and to offer higher yields to attract investors. Underwriters and investors report deteriorating demand and issuance friction, suggesting wider muni spreads and higher funding costs for borrowers in the near term. Expect continued issuance delays and volatility in municipal-market technicals until demand stabilizes.

Analysis

The municipal-bond market experienced its weakest month in more than two years, prompting some issuers to delay or shrink deals and to offer higher yields to attract investors. Underwriters and investors report deteriorating demand and issuance friction, suggesting wider muni spreads and higher funding costs for borrowers in the near term. Expect continued issuance delays and volatility in municipal-market technicals until demand stabilizes.