Plunging interest rates fueled a municipal bond bonanza in January for communities looking to cut their financing costs.
Muni bond issuance soared past $27 billion for the month, the biggest January in five years and a potential harbinger that the market could be in for a huge year, according to an analysis from Chris Mauro, head of U.S. municipals strategy at RBC Capital Markets.
The jump in issuance occurred even as a spate of rough weather at months' end depressed the amount sent to market. Consequently, Mauro thinks 2015 could turn into a big year.
"If this trend continues, 2015 total volume could turn out to be significantly higher than our $335 billion estimate," he said in a note to clients. "The driving force behind the surprisingly strong calendar in January was, of course, the significant decline in interest rates in the month."