DeSantis may put issuers on the spot in escalation of anti-ESG movement

The municipal bond market has always operated at the intersection of politics and finance, but lately politics seem to have taken center stage. The latest salvo comes from Florida Gov. Ron DeSantis' announcement this week that The Sunshine State would move to ban local and state issuers from consideration of environmental, social and governance factors when selling bonds. That includes a "contract prohibition on ratings agencies whose ESG ratings negatively impact the issuer's bond ratings," the governor's office said in a press release.

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Illinois Gov. J.B. Pritzker unveiled a $49.6 billion general fund fiscal 2024 budget that banks on still-healthy economic trends to allow deposits into the budget and pension stabilization funds while lifting spending for education and other areas.

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Issuers in the Far West sold $66.2 billion in municipal bonds in 2022, according to Refinitiv data, a 43% drop year-over-year from the $116.7 billion sold in 2021. A big falloff in issuance from California led the Far West to the biggest year-over-year drop of any region in 2022 in a year when volume nationally was down 19.5%. It was the Far West's lowest showing since 2012.

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Municipal analysts and stakeholders are upbeat about the economy despite the apparent thinning out of the fat surpluses sitting in general funds and reserves, though the looming prospect of a U.S. default is casting a pall over some of that optimism, they said at an event hosted by the Volcker Alliance and the Penn Institute for Urban Research.

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Municipals extended their sell-off Thursday, with the front end of the curve hit the hardest. Triple-A benchmarks were cut 13 to 17 basis points at the one-year, depending on the scale, pushing it to around 3%.

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The Georgia Ports Authority and the Army Corps of Engineers have signed an agreement to expand the Port of Brunswick, a move state officials said will help prepare the port for expansion.

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