{"id":827,"date":"2020-05-11T12:25:00","date_gmt":"2020-05-11T16:25:00","guid":{"rendered":"https:\/\/buymuni.com\/?p=827"},"modified":"2020-05-11T13:23:04","modified_gmt":"2020-05-11T17:23:04","slug":"fed-municipal-liquidity-facility-mlf-pricing-revealed-likely-to-provide-life-line-for-distressed-municipalities","status":"publish","type":"post","link":"https:\/\/buymuni.com\/?p=827","title":{"rendered":"Fed Municipal Liquidity Facility (MLF) Pricing Revealed. Likely To Provide Life Line for COVID19-Impacted Municipalities."},"content":{"rendered":"\n

May 11, 2020 – The Federal Reserve released pricing (see schedule below) for its Municipal Liquidity Facility (MLF) program today.<\/p>\n\n\n\n

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https:\/\/www.federalreserve.gov\/newsevents\/pressreleases\/monetary20200511a.htm<\/a><\/figcaption><\/figure>\n\n\n\n

Two bulge-bracket dealers BuyMuni spoke with were of the view that the credit spreads were “reasonable”. <\/p>\n\n\n\n

“As the benchmark being used is Fed Funds rate not LIBOR or Treasuries, the credit spreads are the effective borrowing rate”, said a New York-based trader.<\/p>\n\n\n\n

The MLF is expected to benefit a myriad of issuers from transit agencies (borrowing through state-level allocations) to states like Connecticut, Illinois, New Jersey and New York.<\/p>\n\n\n\n

For New York State, the epicenter of COVID-19, the MLF program could be an attractive borrowing option. Recent legislative action has paved the way for “deficit borrowing” by the State.<\/p>\n\n\n\n

Based on Federal Reserve eligibility requirements and at its current Aa1 rating, the State could borrow as much as $22 billion (which would require additional legislation as the amount approved was about half the total eligible amount) at an extremely attractive rate of 1.75%.<\/p>\n\n\n\n

The industry benchmark rate – MMD – has ranged between 0.6 – 2.5% over the last two months, and New York municipal issues on the short end tend to price at a spread of 15-50 basis points.<\/p>\n\n\n\n

“While the investor community has a very high regard for the Governor, there isn’t much of a chance of a $10B borrowing even at the short end without a hefty size concession of 80 – 150 basis points”, said a dealer of New York debt.<\/p>\n\n\n\n

“The Federal Reserve is in competition with private buyers, and in this case, has provided a near-limitless put option” he said.<\/p>\n\n\n\n

“Thankfully, they’ll eventually have to come back to the market and refinance the Fed paper”.<\/p>\n\n\n\n

\n\n\n\n

Contact Kyle Skinner at KSkinner@buymuni.com.<\/p>\n","protected":false},"excerpt":{"rendered":"

May 11, 2020 – The Federal Reserve released pricing (see schedule below) for its Municipal Liquidity Facility (MLF) program today….<\/p>\n","protected":false},"author":5,"featured_media":640,"comment_status":"open","ping_status":"open","sticky":true,"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":[154,38,12],"tags":[157],"class_list":["post-827","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-covid-19","category-federal-reserve","category-issuers","tag-municipal-liquidity-facility","wpcat-154-id","wpcat-38-id","wpcat-12-id"],"jetpack_featured_media_url":"https:\/\/buymuni.com\/wp-content\/uploads\/2019\/10\/20191031-BM-Powell.jpg","jetpack_sharing_enabled":true,"jetpack_likes_enabled":false,"_links":{"self":[{"href":"https:\/\/buymuni.com\/index.php?rest_route=\/wp\/v2\/posts\/827","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\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/buymuni.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=827"}],"version-history":[{"count":2,"href":"https:\/\/buymuni.com\/index.php?rest_route=\/wp\/v2\/posts\/827\/revisions"}],"predecessor-version":[{"id":830,"href":"https:\/\/buymuni.com\/index.php?rest_route=\/wp\/v2\/posts\/827\/revisions\/830"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buymuni.com\/index.php?rest_route=\/wp\/v2\/media\/640"}],"wp:attachment":[{"href":"https:\/\/buymuni.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=827"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buymuni.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=827"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buymuni.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=827"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}