Alongside record low interest rates and an unprecedented pandemic induced national shutdown that decimated local and state government revenues, municipal bond issuance for the past year was the highest of all-time. Issuance surged after an epic selloff ensued in March, with municipal markets issuing over $474 billion in total for 2020, an increase of 12% from the prior year. While new money issuance was flat, growth was driven by a 31% increase in refundings and a 104% increase in taxable issuance. Investor demand accelerated throughout the last half of the year with municipal bond yields attractive on a relative basis, while state and local governments sought to take advantage of lower borrowing costs associated with low interest rates while trying to compensate from lost revenues and budget shortfalls attributed to COVID related shutdowns and restrictions.
1 https://www.bondbuyer.com/news/munis-set-issuance-record-at-474-billion-after-taxables-surge
2 https://www.nuveen.com/en-us/thinking/municipal-bond-investing/municipal-market-update