John Miller Sees 2025 Muni Supply Eclipsing Record After Shakeup

(Bloomberg) — Veteran municipal bond investor John Miller is calling for another banner year for new borrowings from state and local governments, even after the global trade war that’s rocking stocks and bonds ripped through the usually placid muni market.

The head of high-yield muni funds at First Eagle Investment Management forecasts long-term municipal sales will reach as high as $550 billion this year, topping 2024’s record. His estimates come after issuers hit pause on dozens of deals earlier this week as a tariff-fueled markets rout spilled over into municipal bonds. 

Transactions were delayed while benchmark yields for securities maturing in 10 years surged roughly 85 basis points in three days, reaching the highest in more than a decade. Such a steep move, so quickly is rare for state and local debt which is usually more insulated against the wide swings seen in other asset classes.

“We might take a breather for a little while until things sort of settle down,” Miller said in an interview. Despite the disruptions, he expects “a robust year for issuers coming to market.”

The abrupt cheapening drew back bargain-hunting investors on Wednesday when muni trading had its busiest day ever while ETFs linked to the asset class notched $630 million of inflows. As rapid as the rout was, after the three-day spike yields fell almost as quickly, dropping about 48 basis points Thursday, according to data compiled by Bloomberg. 

While deals are largely expected to move ahead, they won’t immediately go back to the record pace of the first quarter, said Miller, who joined First Eagle in January 2024 after three decades at Nuveen. His early 2024 forecast for a record year proved prescient, though new issues exceeded $440 billion, the high end of his view.

The one area that’s unlikely to see sales surge is where Miller cemented his reputation as a prolific investor: high yield. Some delays in this niche could turn into cancellations, he cautioned. Without more large deals new debt in this segment is unlikely to outpace last year’s volume, he said.

Higher yielding deals, including those rated BBB and lower, reached about $35 billion in volume last year, by Miller’s estimates. So far in 2025, the segment has seen about $9 billion in sales. He expects the full year to log the same or low-single-digit percentage growth, Miller said. 

“Over, under, it could be very close to that,” Miller said. “I don’t think high yield is necessarily going to have as big an increase.”

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