Muni Sales Tumble to Least Since March Crash After Record Month

(Bloomberg) -- Wall Street’s muni-bond bankers are getting a breather.

After a record surge of debt sales last month by states and cities rushing to borrow before the election potentially upends financial markets, the volume of new deals has slowed to a trickle. Only about $1 billion are scheduled to price this week, the least since the market froze up during the crash set off by the coronavirus in March.

They don’t appear set to revive much anytime soon: Only $6.5 billion of muni-bond sales are so far scheduled for the next 30 days. Even though that figure will rise as more deals are added, it will still be a steep drop from the $71 billion issued last month.

The slowdown promises to provide some support for bond prices, given that money has continued to flow into mutual funds and investors will receive about $47 billion of debt payments in November, according to Citigroup Inc. Such payments are often reinvested and will likely help fuel demand, even with yields holding not far from the lowest in more than six decades.

“We expect much less issuance in November-December and early next year, which should provide a positive technical backdrop for tax-exempts and taxables,” strategists at Barclays Plc said in a note to clients.

©2020 Bloomberg L.P.