WASHINGTON - The $787 billion stimulus package signed into law by President Obama yesterday may spur smaller issuers to increase debt issuance through tax code changes, but may also limit the debt that is sold for transportation, water and wastewater, and other infrastructure projects in the near term because of the new federal funds provided for them.

Moody's Investors Service reached these conclusions in a report issued yesterday that also said that the package's combination of direct funding, tax-related provisions, and tax credits will provide near-term relief from declining revenues and will likely mitigate short-term credit pressures for state and local issuers. However, the package is unlikely to create longer-term credit benefits for most municipal issuers that face "entrenched" credit challenges, the report said.

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