Announcement Follows BDA Requests for Expansion
This afternoon, the Federal Reserve announced it has expanded the scope and duration of the Municipal Liquidity Facility. The press release can be viewed here.
This decisions follows BDA recommendations including in a BondBuyer op-ed and the April 15th comments in which the BDA urged the Fed to expand the scope of the MLF’s participation.
The term sheet can be viewed here.
The revisions include:
- Expansion to U.S. counties with a population of at least 500,000 residents, and U.S. cities with a population of at least 250,000 residents.
- Participation in the facility by certain multistate entities;
- To be eligible for the facility, notes must mature no later than 36 months from the date of issuance—an increase from the previously announced 24-month maximum term; and
- The termination date for the facility has been extended to December 31, 2020 in order to provide eligible issuers more time and flexibility.
The new population thresholds will allow substantially more entities to borrow directly from the MLF than the initial plan announced on April 9. The expansion announced today also allows participation in the facility by certain multi-state entities.
The Fed also announced it is considering expanding the MLF to allow a limited number of governmental entities that issue bonds backed by their own revenue to participate directly in the MLF as eligible issuers. Any decision to include any such additional eligible issuers would be publicly announced at a future date.
They plan to continue to closely monitor conditions in primary and secondary markets for municipal securities and will evaluate whether additional measures are needed to support the flow of credit and liquidity to state and local governments.
The BDA will continue to provide updates as they become available.
