Muni-Bond Market Braces for Borrowing Rush Ahead of Tax Changes
- November, December could be ‘huge’ for issuance, analyst says
- Republican overhaul would pull tax break from many bond types
Photographer: Bloomberg
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The municipal market is preparing for a potential onslaught of bond deals before the end of the year as U.S. lawmakers consider pulling the tax break from tens of billions of dollars of debt issued each year.
The House of Representatives bill would require investors to pay income taxes on so-called private activity bonds, or PABs, which finance projects like airports, water facilities and toll roads, and do away with a frequently used refinancing technique known as advanced refunding. While the Senate version leaves PABs intact, the risk may push borrowers to act before the law is changed, Municipal Market Analytics said in a research report.