{"id":212,"date":"2019-06-10T14:10:15","date_gmt":"2019-06-10T18:10:15","guid":{"rendered":"https:\/\/buymuni.com\/?p=212"},"modified":"2019-06-10T14:17:55","modified_gmt":"2019-06-10T18:17:55","slug":"moodys-bank-credit-and-liquidity-support-flat-as-issuer-variable-rate-issuance-wanes","status":"publish","type":"post","link":"https:\/\/buymuni.com\/?p=212","title":{"rendered":"[Moody&#8217;s] Bank Credit and Liquidity Support Flat As Issuer Variable-Rate Issuance Wanes"},"content":{"rendered":"\n<p>Moody&#8217;s Investors Service said today $7.5 billion of bank facilities (Letters of Credit, LOCs and standby liquidity) were underwritten or extended in Q1 2019, 17% less than the $9 billion quarterly average in 2018 but slighly higher than the $6.9 billion in the corresponding period in 2018.<\/p>\n\n\n\n<p>Our trends observed included:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>New facilities at $708 million were 40% below 2018 quarterly averages, and concentrated in State Housing Finance Agencies (HFA) transactions (55% of all new issues)<\/li><li>Same-bank extensions were dominant, with substitutions sharply down<\/li><li>Foreign banks increased their participation, underwriting 43% of new commitments.  Among the large U.S. banks, Bank of America confined its activity to mostly extending current facilities, while PNC led in new issuance<\/li><li>The top foreign banks were Sumitomo, Helaba, Bank of Nova Scotia, MUFG and TD Bank<\/li><li>Banks have reduced their term risk, with only 53% of facilities having terms of three years or longer.  The average in 2018 was 63%.<\/li><li> While LOCs were more prevalent than standbys, the dominance of HFA issuance has resulted in standbys (which are usually lower cost than LOCs) garnering 62% share of new facilities underwritten. <\/li><\/ul>\n\n\n\n<p>With long-term rates declining, Moody&#8217;s notes that issuers have favored long-term debt versus bank-supported VRDBs. <\/p>\n\n\n\n<p><strong>The municipal industry&#8217;s standard floating rate index (called SIFMA) is 1.40% this week vs a AAA benchmark long-term yield of 1.35%. The highest rated issuers can issue fixed-rate bonds at lower or comparable cost with floating rate instruments, and eliminate all interest rate risk.<\/strong><\/p>\n\n\n\n<p>The Top Five credit providers in Q1, 2019 were:<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li>Bank of America ($1.5 billion extensions, $62 million new issuances or substitutions)<\/li><li>Royal Bank of Canada ($500 million \/ $125 million)<\/li><li>PNC Bank  ($95 million \/ $529 million) <\/li><li>Wells Fargo  ($418 million \/ $110 million) <\/li><li>JP Morgan  ($436 million \/ $84 million) <\/li><\/ol>\n\n\n\n<p>Contact Moody&#8217;s to subscribe or purchase a full report at +1 (212) 553-1653.<\/p>\n\n\n\n<p>Contact Karen Bigelow at KBigelow@BuyMuni.com.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Moody&#8217;s Investors Service said today $7.5 billion of bank facilities (Letters of Credit, LOCs and standby liquidity) were underwritten or&#8230;<\/p>\n","protected":false},"author":8,"featured_media":215,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,12,46],"tags":[49,47,50],"class_list":["post-212","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bank-credit","category-issuers","category-rating-agencies","tag-loc","tag-moodys","tag-standby","wpcat-45-id","wpcat-12-id","wpcat-46-id"],"jetpack_featured_media_url":"https:\/\/buymuni.com\/wp-content\/uploads\/2019\/06\/20190610-Banks.jpg","jetpack_sharing_enabled":true,"jetpack_likes_enabled":false,"_links":{"self":[{"href":"https:\/\/buymuni.com\/index.php?rest_route=\/wp\/v2\/posts\/212","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buymuni.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buymuni.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buymuni.com\/index.php?rest_route=\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/buymuni.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=212"}],"version-history":[{"count":2,"href":"https:\/\/buymuni.com\/index.php?rest_route=\/wp\/v2\/posts\/212\/revisions"}],"predecessor-version":[{"id":218,"href":"https:\/\/buymuni.com\/index.php?rest_route=\/wp\/v2\/posts\/212\/revisions\/218"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buymuni.com\/index.php?rest_route=\/wp\/v2\/media\/215"}],"wp:attachment":[{"href":"https:\/\/buymuni.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=212"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buymuni.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=212"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buymuni.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=212"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}