Moody’s Investors Services says an innovative new form of commercial paper could provide an attractive liquidity solution for variable-rate municipal issuers facing impending Basel III regulatory problems and is a credit positive for the sector.

JPMorgan has come up with a form of commercial paper that will allow banks to continue to support variable-rate product after the start of 2015. There is a $280 billion market for variable-rate demand bonds and similar municipal instruments that rely on bank liquidity support.

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