Municipal Strategy 2026 Supply - More than Expected

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Municipal Strategy 2026 Supply - More than Expected

Barclays | Municipal Strategy

FIGURE 3. Net Issuance FIGURE 4. Updated Issuance Forecast

Type $bn

$bn Net Supply Net Supply Average

280 Gross Supply 590

Tax-Exempt Supply 550 240

Taxable Supply 40 200

New Money Supply 425 160

Refunding Supply 165 120

Total Redemptions 330 80

40 Net Supply 260

-40

'16 '17 '18 '19 '20 '21 '22 '23 '24 25 26F

Source: Bloomberg, Barclays Research Source: Barclays Research

We see substantially more new money versus our previous forecast, while keeping our forecast

for refundings essentially unchanged (Figure 5).

As last year, the surge in issuance has been driven by a handful of states. Of the Big 3, California

is leading and running just slightly ahead of last year’s pace, while New York and especially

Texas have lagged so far (down 6% and 16% y/y, respectively). That said, for Texas in particular,

there is typically a substantial amount of PSF issuance in the summer that could bring totals

higher.

Aside from the Big Three, issuance from Massachusetts, Pennsylvania, and Michigan is running

at a much faster pace than last year (up 30–40%), while Wisconsin, Georgia, and New Jersey are

falling behind by 20-30% (Figure 6).

FIGURE 5. Breakdown by Type FIGURE 6. Issuance by State

$bn New Capital Refunding $bn 2025 2026

450 100

360 80

270 60

180 40

90 20

0 0

'15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26F CA TX NY FL IL AL MA PA WI WA OH CO GA MI NJ

Source: SIFMA, Barclays Research Source: Barclays Research, Bloomberg

Issuers have finally begun to take advantage of the steepness of the high-grade tax-exempt yield

curve this year and have been aggressively shortening maturities on newly issued debt (Figure

7). The share of long bonds has declined from 33% to 23% this year, with the bulk of new