Google parent Alphabet Inc. is poised to enter the municipal-bond market’s prepaid energy space by participating in a $1 billion transaction out of California, a major development in the evolution of a booming segment.

State revenues are softening, and rainy day fund capacity has declined for the first time since the Great Recession, he wrote in his second quarter outlook report released Wednesday. The end of pandemic-era stimulus programs, slowing tax collections and rising costs are all adding to the weakness.

A wave of municipal-bond sales scheduled for this week will test a recent rebound in buyer demand after investors sold their holdings during April’s market rout.

This month’s panic-driven selling across municipal bonds — fueled by the boom in ETFs — is proving a mixed blessing for investors in a normally sedate market corner.

A BlackRock Inc. fund has bought municipal debt issued earlier this year in a first-of-its-kind deal that relies exclusively on blockchain technology.

Goldman Sachs Asset Management is launching four new municipal-bond exchange-traded funds, adding to the $129 billion corner of the state and local government debt market.