Municipal Borrowing Surges to Highest Level in 10 Years
January 11, 2021
With municipal budgets battered by the coronavirus crisis, city and state governments are borrowing more. Issuances of bonds for new projects climbed to $252 billion last year, according to data from Refinitiv. This is a modest increase over the year before and the highest level since 2010.
The new borrowing has increased the total amount of municipal debt to $3.9 trillion, the highest level since 2013, according to data from the Federal Reserve.
Despite the increasing supply, demand for municipal bonds is expected to remain strong. Low interest rates have investors looking for yield wherever they can find it, and the potential for higher taxes in the coming year make the tax benefits of muni bonds more attractive.