WASHINGTON — Municipal market participants on Monday were relieved that Congress was moving toward approving a bipartisan agreement to raise the $14.3 trillion debt limit and avoid a default on federal debt, but were taking a wait-and-see approach on how the plan might ultimately affect the tax-exempt bond market.

Under the plan worked out by congressional leaders and administration officials, President Obama could request a $900 billion increase in the debt limit now, of which $400 billion would be immediately available. Once the government’s debt increased to within $100 billion of the ceiling, the president could ask for an additional $1.2 trillion, which could rise to $1.5 trillion if that amount of savings were found or if a balanced-budget amendment was sent to the states.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.