In October, Texas Attorney General Ken Paxton launched a review, threatening to bar eight banks including Bank of America Corp. and JPMorgan Chase & Co. from managing bond deals because of their commitment to cut greenhouse gas emissions. That review, which is still ongoing, caused governments to shy away from banks that were being evaluated. RBC Capital Markets and Wells Fargo & Co. were both removed from transactions in the weeks following Paxton’s announcement.
The vast majority of the banks under review maintain they should be able to continue to do business under the legislation. And Texas is a lucrative market for municipal bankers in an industry that has contracted overall.
Texas municipalities pay an average of $6.37 in fees for every $1,000 issued, far higher than the national average of $4.92 on long-term bonds, according to data compiled by Bloomberg.
Infrastructure will continue to be a big spending item for Texas governments in the coming years. Voters approved nearly $60 billion of school district bonds the last two years, according to data from the Texas Bond Review Board. Of that, $37 billion has yet to be issued, Richard, the Siebert banker said.
“I anticipate in the near term, we will see pretty robust borrowing needs,” he said.
This article was provided by Bloomberg News.