The Inflation Debate That's Roiling U.S. Markets Faces 2021 Test
They're still in the minority, but investors and economists who think America is in for a bout of inflation - perhaps a serious one - start the year with some fresh ammunition for their arguments. All this has pushed bond-market measures of expected inflation higher. The so-called breakeven rate on 10-year Treasuries climbed above 2% this past week to the highest in more than two years.
Municipal Bond Market Starts the Year Strongly
The municipal bond market is starting 2021 on a strong note amid robust demand, light supply of new issues, and expectations of fiscal relief for state and local governments as well as potentially higher income taxes with full Democratic control in Washington. A key indicator of tax-exempt bond demand, the yield ratio of 10-year triple-A munis relative to the 10-year Treasury note, stands at 66% and is at its lowest level in 20 years.
COVID-19 Pandemic Drives Municipal Borrowing to 10-Year High
Municipal-bond issuance in 2020 was the highest in a decade, reflecting the collapse of interest rates and the increased costs cities and state governments are facing from COVID-19 shutdowns. Bonds for new projects reached $252 billion last year, according to Refinitiv, a small increase from the previous year and the highest since 2010, when a federal incentive program helped push the total above $270 billion.
Fitch Takes Various Rating Actions on U.S. Enhanced Municipal Bonds and TOBs
Fitch Ratings has taken various conforming rating actions on U.S. enhanced municipal bonds and tender option bonds (TOBs) corresponding to actions taken on their associated enhancement providers, liquidity providers, or underlying bonds.
North Dakota GOP Lawmakers Unveil $1.1B Bonding Proposal to Pay for Infrastructure Projects
A group of North Dakota Republican lawmakers has released a proposal for issuing $1.1 billion in bonds to pay for economic development and infrastructure enterprises, including flood prevention projects. Like competing bonding proposals from Gov. Doug Burgum and Democratic legislators, the Republican lawmakers' plan draws on the interest generated by the state's $7.3 billion oil tax savings account, known as the Legacy Fund, to pay back investors.
Massachusetts Lawmakers Pass $16.5B Transportation Bond Bill, Send to Gov. Baker
Massachusetts House and Senate Democrats forged a late-night compromise on a $16.5 billion transportation bond bill, salvaging consensus in the dying moments of the lawmaking session on a multi-year plan to pay for infrastructure improvements while also raising fees on ride-hailing services. A final compromise between House and Senate leaders emerged shortly after midnight Wednesday after months of private negotiations.
Port Covington Development to Resume Construction in Baltimore, MD
Baltimore's Port Covington development team will begin the next phase of construction on the waterfront revitalization project with more than 1 million square feet. of residential, retail, and office space after finalizing a $650 million financing deal. But closing on the next phase's financing — which included $137 million in tax increment financing (TIF) bonds — ensures that the project's momentum has not been lost.
Treasury Yields Hold Steady After Congress Approves Coronavirus Relief Deal
Treasury yields were flat on Tuesday after Congress passed a $900 billion COVID-19 relief package. The yield on the benchmark 10-year Treasury note was little changed at 0.935%, while the yield on the 30-year Treasury bond dipped slightly to 1.671%. Bond yields move inversely to prices.
Ohio Market Access Program Enhances $1B in Notes for Ohio's Local Governments
Ohio Treasurer Robert Sprague announced that the Ohio Market Access Program (OMAP) has now enhanced and lowered interest costs for $1 billion in local government notes. OMAP is a credit enhancement program that leverages the state's excess liquidity and high short-term credit rating to help improve market access and lower borrowing rates for local governments. Since its 2014 launch, OMAP has supported more than 190 deals, ranging from $390,000 to over $100 million.
New York's MTA Maxed Out Its Fed Credit Line. So Now What?
It says a lot about the state of the Metropolitan Transportation Authority's finances that the agency rushed to max out its credit line with the central bank before the MLF was shut down. It borrowed $2.9 billion last week, which would have easily been one of 2020's largest municipal-bond deals if it had gone through the public market.
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