Refunding bonds

Whether a BABs-like program could make it into actual law in Washington is still highly uncertain. What is certain: Some form of infrastructure spending is must-pass legislation because federal-aid highway funding is set to expire in October.

Wednesday will be the first Senate vote on advancing a bipartisan infrastructure deal.

Issuers should recognize their ability to prepay debt is an extremely important term, and they should consult with their MAs to achieve the most liberal prepayment term consistent with the type of financing they are doing.

While June was lower than 2020 in par, pandemic-related factors skewed last year's issuance totals, making the $42 billion issued this month high on a historical basis. Outside factors, such as federal aid and potential infrastructure plans, may affect issuance going forward.

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.

The three-pronged Local Infrastructure Financing Tools Act was introduced Friday by Rep. Terri Sewell, D-Ala.

Forward delivery sales, a replacement for tax-exempt advance refundings, could grow in 2021.

The authority appears ready to take advantage of market conditions following a successful December refunding.

The current prohibition against tax-exempt advance refunding was used as a minor pay-for in the GOP’s Tax Cuts and Jobs Act that cut personal and corporate tax rates.

The first quarter of 2021 concludes with $102.1 billion, slightly higher than the $95.3 billion that the market saw in the COVID-ravaged first quarter of 2020.

The savings from the March 19 bond sale will be dedicated to Guam’s tourism recovery efforts as well as debt service.