Muni-Bond Sales Set to Surge in Boon to Managers Flush With Cash

Municipal-bond fund managers struggling to find securities to buy as cash keeps pouring in are about to get a break: Debt sales by states and cities are poised to pick up.

Strategists at Bank of America Corp., the market’s biggest underwriter, is projecting that governments will issue $42 billion of bonds in May, with rival Citigroup Inc. predicting about $39 billion.

The expected increase from about $36.5 billion in April promises to kick off the usually busy summer season for the U.S. municipal-bond market.

“If you look at supply over the last five years or so, between that May ...