(Bloomberg) -- A strong start to the year is stoking veteran municipal bond investor John Miller’s prediction for sales in the $4 trillion market for state and local government debt.

Municipal issuance will rise 10% to 15% to as high as $440 billion this year, the head and chief investment officer of the high-yield muni credit team at First Eagle Investments said. When the year started, he had expected a 5% increase to $400 billion but surging first-quarter sales led him to revise his estimates upward.

“So far we’ve come out of the gates a bit on the high end,” Miller said. “I am being influenced, I have to admit, by the first quarter.”

Long-term municipal sales rose more than 30% during the first quarter to about $98 billion, according to data compiled by Bloomberg. Miller’s higher forecast would put 2024 near the average posted in years before the “abnormally low” issuance over the last two years, he said.

“It is just getting back to normal,” said Miller, who spent almost three decades at Nuveen before joining First Eagle in January to build its high-yield public finance department from scratch. 

Governments are beginning to sell more debt as federal aid that bolstered cash balances and depressed issuance winds down, Miller said. More muni borrowers are also accepting that the Federal Reserve will keep interest rates higher for longer and are not waiting for rate cuts to sell debt, he added. Some issuers are even coming to market to refinance Build America Bonds.

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Miller joins others in expecting a rebound in issuance. Earlier this month, BofA Securities raised its 2024 issuance forecast by 15% to $460 billion, up from its earlier prediction of $400 billion. In January, Hilltop Securities boosted its 2024 long-term municipal bond issuance forecast to $420 billion from a November projection for $330 billion, which at the time was among lower initial forecasts.

Two firms that initially projected higher municipal sales, Barclays Plc and Vanguard Group Inc., said this week they are maintaining their forecasts for as much as $420 billion in issuance.

Barclays is “comfortable” with its original estimate given that sales are “always front loaded” in years with US presidential elections, said Mikhail Foux, head of municipal strategy at Barclays.

Vanguard is maintaining its prediction because “the supply outlook will be highly dependent on the level of interest rates and their path,” Paul Malloy, head of the firm’s municipal investments, said in an emailed statement. 

“Given recent uncertainty in the Fed path given economic strength and firmer inflation, the supply forecast is becoming more uncertain as well,” Malloy said.

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