Debt

The rising costs of federal debt, an impending budget showdown, and Congressional turmoil is highlighting the complex relationship between Treasury securities and municipal bonds.

The growing federal debt level may pressure lawmakers to retract or reduce the tax-exemption for munis to generate revenue, some market participants argue.

To maintain the city's good credit rating and robust fiscal health, New York City Comptroller Brad Lander is also proposing a stronger debt management policy to make sure the city keeps its debt service below 15% of tax revenues.

The bond division undertook two transactions last week to retire outstanding taxable public education capital outlay and state revolving fund bonds. The transactions used $200 million in program funds, along with additional money, to pay down $400 million in state debt.

The fiscal 2024 budget proposal leans on federal funds, better-than-expected tax collections, and a drawdown on reserves to bankroll a wide array of capital work and a boost to state employee salaries.

The bipartisan legislation offers hopes for other municipal bond industry priorities.

The Treasury Department's Bureau of Fiscal Service has suspended the sales of State and Local Government Series securities in efforts to avoid defaulting on the debt limit.

The state's benchmark debt ratio for debt service to revenue is at 3.78% — well below a 6% target and 7% limit.

A Reason Foundation study found K-12 debt steadily rising since 2014.

The nation's second most populous state plans to expand debt issuance despite the continuing pandemic.

The $2.5 trillion increase is expected to get the U.S. through 2023.

Even short government shutdowns create uncertainty and risks for city leaders.

The Justice Department analysis was released Wednesday in conjunction with a House Natural Resources Committee hearing on two competing bills aimed at determining the territory’s future.

Illinois is among the states that critics say have downplayed their unfunded long-term debts and should be forced by new GASB rules to become more transparent.

Munis were stronger across the curve as secondary trading was constructive and bellwether credits moved yields lower.

Such moves could reduce costs by up to $180 million in present-value savings, Joe Torsella said.