D.C. Deadlines: Government Funding and the “Benefits Cliff,” MLF's Expiration, Transit Cuts Announced

  • The Federal Reserve’s Municipal Liquidity Facility (MLF) will not be among the Fed programs to be extended 90 days. The MLF will expire at the end of the year.

  • There is a busy December 2020-January 2021 legislative calendar that could impact municipals. Federal government funding runs out on Dec. 11, there is a “Benefits Cliff” at the end of December, the Jan. 5 Georgia run-off results will help decide the party that controls the Senate, and another round of COVID-19 relief remains in question.

  • Record supply was absorbed by steady municipal market demand in 2021. $72 billion of bonds were sold in October, slighting beating December 2017’s $69 billion.

  • We expect overall municipal bond issuance will be down in 2021. Issuance is likely to fall to about $375 billion according to our analysis.

  • More public finance government job losses were announced by transit agencies in San Francisco and Washington D.C. this week. We expect public finance government employee losses to mount without a clear indication of federal aid from Washington.

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