Illinois Taps Fed’s Municipal Liquidity Facility, Fed Expands Eligibility

  • Illinois will be the first eligible issuer to tap the Fed’s Municipal Liquidity Facility (MLF). At this point, we do not expect a rush of eligible issuers to begin applying and use it because the MLF pricing is well above current municipal market yields. However, others are possible in the coming weeks.

  • Illinois is going to borrow $1.2 billion of one-year general obligation notes through the MLF and pay 3.82%, per Illinois officials. The sale will close on Friday, June 5, 2020.

  • The Federal Reserve’s actions to support and stabilize the municipal market in recent months have not only been extraordinary, but welcomed and needed. The MLF is another example of that support.

  • Also today, the Federal Reserve expanded the number and type of municipal entities that can directly use its MLF.

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