Bank of America Wins First Texas Muni Deal Since GOP-Backed Law
Bank of America Corp. has won its first municipal bond deal in Texas since the state passed a law backed by Republicans that limits the fees banks can charge for underwriting debt.
The bank was the lead underwriter on a $1.2 billion sale of bonds by the Texas Water Development Board, according to data compiled by Bloomberg. The deal was priced on July 8 and included $835 million of taxable debt and $375 million of tax-exempt bonds.
The law, which was passed in 2021, requires banks to charge no more than 1.5% of the principal amount of the bonds they underwrite. It also requires banks to disclose the fees they charge for underwriting debt.
The law was opposed by the banking industry, which argued that it would reduce competition and lead to higher borrowing costs for municipalities.
Background of the Law
The law was passed in 2021 after a long battle between the banking industry and the state of Texas. The banking industry argued that the law would reduce competition and lead to higher borrowing costs for municipalities.
The law was supported by Republicans, who argued that it would help protect taxpayers from excessive fees charged by banks. The law was opposed by Democrats, who argued that it would reduce competition and lead to higher borrowing costs for municipalities.
The law was also opposed by the banking industry, which argued that it would reduce competition and lead to higher borrowing costs for municipalities.
Impact of the Law
The law has had a significant impact on the municipal bond market in Texas. Since the law was passed, the number of banks participating in municipal bond deals in Texas has decreased significantly.
In addition, the fees charged by banks for underwriting municipal bonds in Texas have decreased significantly. According to data from Bloomberg, the average fee charged by banks for underwriting municipal bonds in Texas has decreased from 1.8% in 2021 to 1.5% in 2023.
The decrease in fees has had a significant impact on the municipal bond market in Texas. According to data from Bloomberg, the total amount of municipal bonds issued in Texas has decreased from $14.2 billion in 2021 to $10.7 billion in 2023.
Bank of America’s Win
Despite the decrease in fees and the decrease in the total amount of municipal bonds issued in Texas, Bank of America was able to win its first municipal bond deal in Texas since the law was passed.
The bank was the lead underwriter on a $1.2 billion sale of bonds by the Texas Water Development Board, according to data compiled by Bloomberg. The deal was priced on July 8 and included $835 million of taxable debt and $375 million of tax-exempt bonds.
The deal was a success for Bank of America, which was able to win its first municipal bond deal in Texas since the law was passed. The success of the deal shows that the bank is still able to compete in the municipal bond market in Texas despite the law.
Conclusion
The law passed in 2021 has had a significant impact on the municipal bond market in Texas. The number of banks participating in municipal bond deals in Texas has decreased significantly and the fees charged by banks for underwriting municipal bonds in Texas have decreased significantly.
Despite the decrease in fees and the decrease in the total amount of municipal bonds issued in Texas, Bank of America was able to win its first municipal bond deal in Texas since the law was passed. The success of the deal shows that the bank is still able to compete in the municipal bond market in Texas despite the law.