Citigroup Inc. lowered its estimate of U.S. municipal bond issuance this year to $240 billion from $275 billion a month ago, in part because fiscal austerity is leading local governments to borrow less.
“I keep cutting it and cutting it and cutting it,” George Friedlander, the bank’s chief municipal-debt strategist, told the National Federation of Municipal Analysts’ conference in Charleston, South Carolina, today.
At the start of the year, Citigroup estimated $350 billion in sales. Last year, total issuance, which includes variable- rate debt, climbed to $453.7 billion from $443.6 billion in 2009, according to data compiled by Bloomberg.
Sales this year have slowed as new governors took office and as governments faced a limited capacity to pledge revenue to new borrowing, Citigroup strategists wrote in an April 1 report.
“Cutting ribbons equals being a spender, and that’s a politically unpopular thing to do,” Friedlander said today.
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