Resolve "Automatically created MR uses wrong target branch (when branching from Tag)"

app/services/merge_requests/create_from_issue_service.rb

@@ -41,7 +41,9 @@ module MergeRequests
     end
 
     def ref
-      @ref || project.default_branch || 'master'
+      return @ref if project.repository.branch_exists?(@ref)
+
+      project.default_branch || 'master'
     end
 
     def merge_request

changelogs/unreleased/45400-automatically-created-mr-uses-wrong-target-branch-when-branching-from-tag.yml

@@ -0,0 +1,5 @@
+---
+title: Set MR target branch to default branch if target branch is not valid
+merge_request: 19067
+author:
+type: fixed

spec/services/merge_requests/create_from_issue_service_spec.rb

@@ -125,9 +125,14 @@ describe MergeRequests::CreateFromIssueService do
       end
 
       context 'when ref branch does not exist' do
-        it 'does not create a merge request' do
-          expect { described_class.new(project, user, issue_iid: issue.iid, ref: 'nobr').execute }
-            .not_to change { project.merge_requests.count }
+        subject { described_class.new(project, user, issue_iid: issue.iid, ref: 'no-such-branch').execute }
+
+        it 'creates a merge request' do
+          expect { subject }.to change(project.merge_requests, :count).by(1)
+        end
+
+        it 'sets the merge request target branch to the project default branch' do
+          expect(subject[:merge_request].target_branch).to eq(project.default_branch)
         end
       end
     end