US states and local governments are selling municipal bonds at a record clip, borrowing more than $500 billion so far in 2025 as infrastructure and airport upgrades demand funding. Issuance is up nearly 6% from last year, on track to exceed $600 billion by year-end, Bloomberg data shows. Despite higher interest rates, borrowers must proceed with deals to finance "capital projects that need to get funded," said Eric Kazatsky, client portfolio manager at MacKay Municipal Managers.
The influx of bond sales comes amid strong returns for munis—the Bloomberg Municipal Bond Index is up 2.8% this month through Thursday, on track for the best October in at least 30 years and the first positive month since June.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing