The Council of Development Finance Agencies (CDFA) is pleased to announce the release of Development Finance Solutions for Building Back Better: Policy Priorities for the Biden-Harris Administration. Built in collaboration with development finance agencies across the country and several key advocacy partners, this paper provides a roadmap for the new administration to use development finance solutions to address the numerous interconnected challenges facing the U.S. economy.

In a new report on the effects of the COVID-19 pandemic on the municipal bond market, the MSRB found market resilience in the face of unprecedented volatility. The MSRB found unprecedented municipal mutual fund outflows in March 2020, but net inflows of $39 billion by the end of the year, as well as a return to lower rates following significant market dislocation in March 2020.

Sean Carney, BlackRock Financial's head of municipal strategy, discusses the impact of the proposed Biden administration's stimulus plan on municipal bonds with Bloomberg's Taylor Riggs on "Bloomberg Markets."

Lawmakers, bond lawyers, and other proponents of tax-exempt refunding bonds are hopeful Congress will reinstate the instruments, bolstered by comments made by recently-confirmed Transportation Secretary Pete Buttigieg. Secretary Buttigieg has said reinstating tax-exempt advance refunding bonds holds promise as a source of relief for local governments.

For an example of how negative real interest rates are distorting prices, behold the municipal bond market. Last month investors snapped up $560 million in bonds issued by junk-rated Chicago Public Schools (CPS). The district's 10-year bonds were priced at 1.94% and the 20-year at 2.24%—a mere 117 to 105 basis points above the AAA muni benchmark yields. As the district's finances have deteriorated, its borrowing costs have plunged.

All things considered, the municipal bond market had an exceptional 2020. Going forward, Cohick believes demand for muni bonds will continue to rise as investors search for yield in light of historically low U.S. Treasury rates, a falling dollar, and increased fears of rising inflation. There's also the political environment to consider.

The City of Detroit's ambitious project to rehab 8,000 vacant homes and demolish another 8,000 got its first infusion of funds as the City of Detroit sold the first $175 million in bonds of a planned $250 million neighborhood improvement effort. In November, more than 70% of Detroit voters approved letting the city sell the bonds.

The coronavirus pushed three dozen municipal-debt issues for senior living communities into default last year and another five have already missed payments in 2021, sowing distress in one of the nation's safest bond markets. The securities deals that defaulted for the first time in January included one for a retirement community in the Chicago suburbs.

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.

CDFA Legislative Briefing
Wednesday, February 17, 2021 - 1:00 PM - 2:00 PM Eastern

Intro Tax Increment Finance WebCourse
March 24-25, 2021 - Daily: 12:00-5:00 PM Eastern

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