Refunding bonds

The authority will scoop-and-toss some near-term debt to avoid a shortfall that would force Chicago to dig into its own pockets to cover a hotel tax shortfall.

U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley described the proposal as “a good faith offer and a significant step in the right direction.”

Reinstatement of tax-exempt advance refunding bonds appears to have the broadest support because of its nearly universal impact on state and local issuers as well as nonprofits.

Rep. Richard Neal, D-Mass., the committee chairman, also called for reviving direct-pay Build America Bonds.

The American Infrastructure Bonds Act of 2021 would create a new series of direct-pay bonds that, unlike BABs, would be exempt from federal budget sequester cuts.

Reported savings from advance refundings make great headlines, but they come with a concealed opportunity cost: waiting with refunding until the call date is likely to be considerably more beneficial.

The White House and a bipartisan cadre of lawmakers appear committed to getting infrastructure, including top muni market lobbying goals, achieved.

“Our net present value savings were $191.5 million or a record-setting 29%," said North Texas Tollway Authority Chief Financial Officer Horatio Porter.

With federal aid rolling out, the municipal credit picture is improving and issuers are coming to market at a faster clip. An infrastructure package could push issuance levels even higher.

Public finance groups hope that the Biden administration will show the same support for tax-exempt bonds that House Democrats do.