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CDFA Bond Finance Update - January 19, 2021

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Bond Finance Update
January 19, 2021
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CDFA Bond Finance Update


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.

Market Reports

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

Weekly Market Outlook
Moody's Analytics | Jan. 7 | Bond Finance | Market Reports

Upcoming Events

Intro Bond Finance WebCourse
February 24-25, 2021 - Daily: 12:00 - 5:00 PM Eastern
The Intro Bond Finance WebCourse provides an in-depth look at governmental and qualified private activity bonds, with a focus on industrial development bonds (IDBs), 501(c)(3) non-profit bonds, exempt facility bonds, and other special bond programs...

Advanced Bond Finance Course
May 24-25, 2021 - 12:00 - 5:00 PM Eastern
The Advanced Bond Finance Course is designed for professionals who already have an understanding of tax-exempt financing and seek detailed instruction on complex financing techniques. Expert speakers will explore topics including the application of financial derivatives, advance refundings, investing bond proceeds, and how to spot arbitrage issues.

News from The Bond Buyer

The latest municipal finance headlines from The Bond Buyer.

Munis Slightly Weaker but Outperform UST as Ratios Hover at 10-Year Lows
Municipal triple-A yield curves were weaker by a basis point on bonds three years and out Tuesday as new issues began to trickle in and U.S. Treasuries pared back the day's earlier losses. The disconnect between munis and UST continues and ratios hover at 10-year lows.

Libor Transition is a 2021 SEC Priority for the Muni Market
The 2021 priorities for the Office of Municipal Securities at the Securities and Exchange Commission are the transition away from Libor and improving the timeliness of financial disclosures. Rebecca Olsen, director of the Office of Municipal Securities, highlighted the Libor transition in a presentation Wednesday in which she noted that the addition of any other priorities will have to await the appointment of a new SEC chairman.

Outlook 2021: A Banner Year for Muni Law Changes?
Public finance groups are optimistic 2021 will be a breakthrough year for the enactment of federal tax law changes to help grow the use of tax-advantaged bonds. The National Association of Bond Lawyers recently sent a letter to President-elect Joe Biden's transition team highlighting "a series of proposals that will allow state and local governments immediate access to much-needed capital." The recommendations include both regulatory relief that could be quickly implemented and changes in tax law that NABL officials are hoping will be included in infrastructure legislation in 2021.

Trailblazing Women in Public Finance 2020
Here's to the women in public finance who not only lead by example. They lead by results.

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

Congress Considering Money to Unbuild Freeways and Rebuild Communities
Next City | Jan. 13 | Bond Finance | Infrastructure Finance | Legislative

New Bond Proposal to Be Introduced at Shreveport, LA City Council Meeting
Shreveport Times | Jan. 13 | Bond Finance | Community Development | Infrastructure Finance

Noblesville, IN Council Pledges $10M TIF Bond to East Bank Apartment Complex
Indiana Business Journal | Jan. 13 | Bond Finance | Housing Finance | Tax Increment Finance (TIF)

Democrat-Run Congress Bolsters Odds of State, City Aid
Bloomberg | Jan. 7 | Bond Finance | Disaster Recovery & Relief | Economic Development | Legislative | COVID-19

Democrats Begin Laying Groundwork for Big Budget Plans
Roll Call | Jan. 7 | Bond Finance | Disaster Recovery & Relief | Economic Development | Infrastructure Finance | Legislative | COVID-19

Governor Lamont Announces $3.77M in State Funding for Bridgeport's Cherry Street Revitalization
State of Connecticut | Jan. 5 | Bond Finance | Brownfield Financing | Opportunity Zones

Illinois Finance Authority, State EPA Close $500M Clean Water Initiative Green Bonds
River Bender | Dec. 31 | Bond Finance | Green Finance | Member News | Revolving Loan Funds (RLFs) | State Finance Program | U.S. Environmental Protection Agency (EPA) | Water Finance | Green Bonds | Green Bonds | State Green Finance Programs | Water Finance | Case Studies | State Revolving Fund | EPA Case Studies

NYCHA Bangs Out Another Affordable Housing Deal With Private Developer
Real Estate Weekly | Dec. 29 | Bond Finance | Housing Finance | Tax Credits | Private Activity Bonds | Low Income Housing Tax Credits (LIHTCs)

Can 2020 Bond-Financed Projects Access the Fixed 4% Rate in the COVID-19 Legislation?
Nixon Peabody | Dec. 29 | Bond Finance | Housing Finance | Tax Credits | Private Activity Bonds | Low Income Housing Tax Credits (LIHTCs)

District of Columbia Housing and Finance Agency Finances New Affordable Development in Takoma
Yahoo Finance | Dec. 28 | Bond Finance | Housing Finance | Tax Credits | Private Activity Bonds | Low Income Housing Tax Credits (LIHTCs)

Making Kenosha, WI's Ambitious Plans a Reality
Kenosha News | Dec. 22 | Bond Finance

Carmel, IN Council to Weigh Issuing $125M in Bonds for City Projects
IBJ | Dec. 21 | Bond Finance | Tax Increment Finance (TIF)

Terre Haute, IN Plans to Be in New Police Headquarters by August of 2021
Herald Bulletin | Dec. 21 | Bond Finance | Tax Increment Finance (TIF)

Illinois' Bond-Market Penalty Hits Lowest Since Pandemic Crash
Bloomberg | Dec. 14 | Bond Finance | Disaster Recovery & Relief | COVID-19

Denver, CO Saves Over $60M from Better Denver Bonds Refunding, Closes on the Elevate Denver Fourth Issuance
Patch | Dec. 14 | Bond Finance | Community Development | Economic Development

Fitch Rates Florida DOT Financing Corp's $160M Revs 'AA+'; Outlook Stable
Fitch Ratings | Dec. 14 | Bond Finance | Infrastructure Finance

Florence County, SC Council to Consider $120M Bond Ordinance
SC Now | Dec. 14 | Bond Finance

City Of Liberal, KS Approves General Obligation Bonds
KSCB News | Dec. 14 | Bond Finance | Community Development | Rural Development

FAME Approves Additional Financing as Saddleback Ski Resort Prepares to Reopen
MaineBiz | Dec. 14 | Bond Finance | Member News | Tax Credits

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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