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CDFA Bond Finance Update - August 17, 2021

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Bond Finance Update
August 17, 2021
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CDFA Bond Finance Update


Help CDFA Support Tax-Exempt Bond Provisions in the Infrastructure Bill
CDFA is continuing to work strategically with Congressional leaders to ensure the infrastructure bill contains a tax-exempt bonds section. As part of our ongoing efforts, we're re-issuing our coalition letter to Congress asking that several key bond financing provisions be included in the infrastructure package. Please sign our coalition letter to show your organization's support for tax-exempt bonds.

Bipartisan Infrastructure Legislation Passes Senate, Includes Carbon Capture Improvement
U.S. Senators Rob Portman (R-OH) and Michael Bennet (D-CO) announced that their bipartisan Carbon Capture Improvement Act has passed the Senate as part of the Infrastructure Investment & Jobs Act. The Carbon Capture Improvement Act makes it easier for power plants and industrial facilities to finance the purchase and installation of carbon capture, utilization, and storage equipment, as well as direct air capture (DAC) projects through the use of private activity bonds (PABs).

Port of Miami to Sell $1.4B in Muni Bonds
Florida officials announced the largest pandemic-era municipal-bond sale backed by port revenue, hoping to tap into investor demand for local-government debt tied to recovering sectors of the U.S. economy. Miami-Dade County said Monday it is selling around $1.4 billion of bonds due 2050 and backed by revenue from the Port of Miami, the county's largest municipal bond sale ever.

Multifamily Private Activity Bond Issuance Reached Record High of $16.4B in 2019: CDFA
CDFA reports that in 2019 housing finance agencies issued a record $16.4 billion in multifamily private activity bonds (PABs), a $1.69 billion or 11.5% increase from 2018. Furthermore, $9.48 in single-family mortgage revenue bonds were issued, a $2.12 billion or 22.4% gain from 2018.

Six Months After Storm, $4B in Utility Debts Loom in Oklahoma
The Oklahoma Development Finance Authority approved contracting with bond counsel, special counsel, disclosure counsel, and 18 banks to underwrite the state's new, mammoth utility ratepayer debt securitization programs. ODFA could end up issuing about $4 billion in bonds in an effort to limit the interest rate payments that utility companies will pass along to Oklahomans who sustained inflated electricity and gas bills when natural gas prices spiked during February's historic winter storm.

More Muni Issuers Are Making Banks Compete to Win Bond Deals
In stark contrast to a year ago when states and local governments hit by the pandemic had to woo skittish investors, more issuers are selling municipal bonds through competitive auctions that put the risk on underwriters. The amount of long-term bonds sold through competitive deals has risen to $64.6 billion so far this year, a 32% increase from the same period of 2020 and the highest for the year-to-date period since 2016.

What Will the End of LIBOR Mean for the Multifamily Industry?
The multifamily housing industry is moving closer to phasing out its long-standing index for adjustable-rate loans and other financial transactions. The London Interbank Offered Rate (LIBOR), which covers five currencies and seven tenors, is on its way out after years of being a globally accepted benchmark. The Alternative Reference Rates Committee (ARRC) has identified the Secured Overnight Financing Rate (SOFR) as LIBOR's replacement.

What Are Build America Bonds or Direct-Pay Municipal Bonds?
Interest on many municipal bonds issued by local and state governments and some non-profits is exempt from federal income taxes. As a result, investors, mainly high-income individuals, are willing to lend money to issuers at a lower interest rate than they would demand if the bonds were taxable. The BABs program ended in 2010, but the concept has been part of the 2021 debate over financing increased federal infrastructure spending.

Market Reports

Weekly Market Outlook
Moody's Analytics | Aug. 12 | Bond Finance | Market Reports

Capital Market Insights
Wye River Group | Aug. 12 | Bond Finance | Market Reports

Overview of the Taxable Municipal Bond Market
Aug. 11 | Bond Finance | Disaster Recovery & Relief | Economic Development | Municipal Securities Rulemaking Board (MSRB) | Federal Reserve | U.S. Dept. of Treasury

Upcoming Events
CDFA Federal Financing Webinar Series: Investing in Critical Community Facilities

CDFA Rural Development Finance Webinar Series: Best Practices for Rural Development Finance Agencies
Tuesday, August 31, 2021 - 2:00 PM - 3:00 PM Eastern
During the third installment of the CDFA Rural Development Finance Webinar Series, discover best practices of development finance agencies to help you identify the right partner for your projects.

CDFA // BNY Mellon Development Finance Webcast Series: Layering the Capital Stack
Tuesday, September 21, 2021 - 2:00 PM - 3:00 PM Eastern
The phrase "Capital Stack" is one that is pretty commonplace in the Development Finance nomenclature these days, but what does it truly mean to build the Capital Stack and how can it work for your project? This session will discuss how Bonds, Tax Increment Finance, Tax Credits as well as the litany of federal funding through recent legislation can work for your project and ultimately the community that is benefitting.

News from The Bond Buyer

The latest municipal finance headlines from The Bond Buyer.

Institutions Take Center Stage in Taxable Trade
The taxable municipal securities market was primarily driven by institutional trading in 2020, in contrast to the individual-investor-driven Build America Bonds-era boom. The increasing influence of institutional market participants is consistent with overarching trends in the tax-exempt market, but is seen more so in taxables, a Municipal Securities Rulemaking Board report finds.

MSRB Study Points to Impact of Federal Reserve's Pandemic Response
A significant disparity between how the effective spreads of municipal and corporate bonds declined following the most volatile month early in the pandemic may be at least partly explained by the differential treatment they received from Federal Reserve backstop programs. That was a conclusion drawn by a new Municipal Securities Rulemaking Board study.

Municipal Bond Borrowers Missing Infrastructure Window of Opportunity
While the Biden administration and Congress hash out plans for national infrastructure spending, shrinking borrowing costs across sectors and credit quality offer an opportunity that state and local governments shouldn't waste, Merritt Research Services says in a new report.

Tourism-Destination Airports Resurge as Domestic Travel Gains
As the coronavirus pandemic continues to impede international travel, domestic flights have become more important to the economic health of airports in the U.S. According to a Moody's report released July 19, travel volume to some tourist destinations this spring exceeded levels last seen in pre-pandemic 2019.

CDFA is proud to partner with The Bond Buyer as our Official Media Sponsor. Read more about this partnership and all of its benefits here.

Bond Finance Headlines

Hackensack, NJ's Municipal Bond Rating Raised by Standard & Poor's
Tap Into Hackensack | Aug. 13 | Bond Finance

Broomfield, CO City Council Approves Allotment Contract for Windy Gap Firming Project
Times-Call | Aug. 13 | Bond Finance | Energy Finance | Water Finance

Norfolk, VA Unveils 3 Proposals to Redevelop Mall Area
The Virginian-Pilot | Aug. 13 | Bond Finance | Opportunity Zones | Redevelopment

Las Vegas, NV Train Bonds Will Go To California Housing
Bloomberg | Aug. 12 | Bond Finance | Infrastructure Finance

Affordable Housing Development to be Renovated in Grand Junction, CO
Grand Junction Sentinel | Aug. 12 | Bond Finance | Housing Finance | Rural Development

Wake County, NCDOT to Borrow Nearly $900M for Construction Projects
The Center Square | Aug. 12 | Bond Finance | Infrastructure Finance

Uncovering Local-level Risk Factors for Municipal Exposures
S&P Global | Aug. 12 | Bond Finance | Disaster Recovery & Relief | Economic Development | COVID-19

Green Muni Bonds Are Blooming Slowly
Morningstar | Aug. 12 | Bond Finance | Energy Finance | Green Finance

Going Green Could Be the Next Big Thing in Municipal Bonds
ETF Trends | Aug. 12 | Bond Finance

American Dream Mall Draws on Reserves to Make Bond Payment
Bloomberg | Aug. 12 | Bond Finance | Community Development

Tarrant County, TX Commissioners Court Calls for $516M Bond Election in November
Community Impact | Aug. 12 | Bond Finance

Brookhaven, GA Development Authority Moves Forward on $15M Tax Abatement
Atlanta Journal-Constitution | Aug. 12 | Bond Finance | Incentives | Redevelopment | Tax Credits

IDA of Callaway County, MO Announces Closing of $13M Bond Financing for Westminster College
Fulton Sun | Aug. 12 | Bond Finance | Education

West Falls Church, VA Developments Secure New Approvals
Patch | Aug. 12 | Bond Finance | Housing Finance

California Treasurer Fiona Ma Announces First Sale of Revenue Bonds for Community College Housing
Orange County Breeze | Aug. 12 | Bond Finance | Community Development | Education

WHEDA Lowering Interest Rates on Its Tax-Exempt Bond Financing and Other Financing Tools
WHEDA | Aug. 12 | Bond Finance | Member News | Tax Credits

Mayor of Denver, CO Proposes New Arena at National Western Center as Part of $450M Infrastructure Bond Proposal
Fort Morgan Times | Jul. 27 | Agriculture Finance | Bond Finance | Economic Development | Food Systems Finance | Infrastructure Finance | Case Studies

Highlights from the Online Resource Database

Value Capture Strategies and Municipal Bonds and Debt
Bond Finance | Economic Development | Infrastructure Finance | Public-Private Partnership (P3) Financing | Webcasts
This FHWA webinar discusses how municipal bonds and debt can be used as a value capture strategy for highway-related projects. The webinar is intended for professionals from States, cities, counties, Tribes, and metropolitan and rural transportation agencies looking for innovative funding and financial strategies to pay for transportation projects.

Limits of Disclosure Regulation in the Municipal Bond Market
Bond Finance | Economic Development
Using a novel data set on municipal private debt disclosures, the authors of this academic research study the effectiveness and market impact of disclosure regulation in the municipal debt market. By comparing reportable private debt events to the universe of realized disclosures, we find evidence that issuers significantly underreport private debt.

The Council of Development Finance Agencies is a national association dedicated to the advancement of development finance concerns and interests. CDFA is comprised of the nation's leading and most knowledgeable members of the development finance community representing public, private, and non-profit entities alike. For more information visit CDFA.net or email info@cdfa.net

For more information about sponsoring one of CDFA's electronic newsletters, please contact CDFA or call 614-705-1300.

Council of Development Finance Agencies
100 E. Broad Street, Suite 1200
Columbus, OH 43215
(614) 705-1300


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