|Private activity bond (PAB) issuance reached record-high levels in 2019 before declining slightly in 2020, according to the Council of Development Finance Agencies’ (CDFA) Annual Volume Cap Report for 2019 and 2020. The report, released late last week, presents data on how states allocate and use their PAB cap each year. This report covers 2019 and 2020; CDFA did not conduct its annual survey in 2019 due to the COVID-19 pandemic. As in the previous five years, Housing Bonds, including single-family Mortgage Revenue Bonds (MRBs) and multifamily bonds, made up the bulk of PAB issuance in 2019 and 2020.
According to the report, total PAB issuance in 2019 was $30.5 billion, up more than 20 percent from $25.3 billion in 2018. This is the highest level of PAB issuance recorded since CDFA starting tracking in 2005. PAB issuance decreased in 2020 to $27.7 billion, the second-highest level on record.
Housing Bonds again accounted for the overwhelming share of PAB activity in both years. The report finds that state and local governments issued nearly $25.9 billion in Housing Bonds in 2019, up more than 10 percent from $23.2 billion in 2018. Housing Bond issuance declined slightly in 2020 to $24.3 billion, caused by a decline in MRB issuance. Housing Bonds accounted for 84 percent of total PAB issuance in 2019 and 88 percent of total issuance in 2020. Housing Bonds have made up at least 80 percent of all PABs issued for seven consecutive years.
Multifamily bond issuance saw notable increases in both 2019 and 2020. Total multifamily issuance increased to $16.4 billion in 2019, up from $14.6 billion the prior year, and set a new record in 2020 at $17.2 billion. According to CDFA, multifamily bonds accounted for 94 percent of PAB issuance used to finance the development of “exempt facilities.”
MRB issuance also was strong in 2019, increasing from $7.35 billion in 2018 to an all-time high of $9.4 billion. In 2020, MRB issuance fell nearly 25 percent to just over $7 billion, still higher than any year from 2010 to 2017. The report also notes Mortgage Credit Certificate issuance was $7.3 billion in 2019 before declining to $4.4 billion in 2020.
This year’s CDFA report also highlights the increasing demand for PAB volume cap across the country. According to the report, states’ total PAB capacity in 2019 decreased to $89.7 billion from 2018, a 3.8 percent decline. Total national bond capacity fell farther in 2020 to $87.6 billion. CDFA reports 20 states currently are oversubscribed on their PAB authority.