The Federal Reserve broadened the universe of states and local governments that can tap into a new $500 billion borrowing program for cash needed in the wake of the coronavirus outbreak, but certain newly disclosed requirements may shut some out, municipal market analysts said on Tuesday.
FILE PHOTO: The Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 27, 2019. REUTERS/Brendan McDermid
With the flow of more federal money uncertain, cities, states and counties facing deep revenue losses from the economic fallout of shutdowns aimed at curbing the spread of the novel coronavirus may need to borrow to keep their governments operating. “Clearly, the way it’s written will hamper participation,” said Mikhail Foux, head of municipal strategy at Barclays, adding that the program will “effectively be used as a backstop unless the language is changed.”
As for the cost of borrowing under the yet-to-be-launched program, the Fed said it will establish a pricing methodology based on an issuer’s long-term rating and the maturity of its notes, plus a spread over an existing benchmark or index.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Fed seen making small changes to keep fed funds above zeroThe Federal Reserve is widely expected on Wednesday to lift the interest rates that influence its fed funds target, a technical move that could keep interbank lending running smoothly and help prevent financial market disruption should the benchmark rate fall below zero.
Read more »
WSJ News Exclusive | How Fed Intervention Saved CarnivalThe previously unreported tale of Carnival’s rescue shows how effective the Fed has been in turning the debt spigot back on for large corporations
Read more »
‘Fate and History’: The Fed Tosses the Rules to Fight Coronavirus DownturnBy lending widely to businesses, states and cities, the central bank is breaking taboos about who gets money to prop up a frozen U.S. economy, risking a political backlash down the line.
Read more »
The Fed says it is expanding its municipal bond buying programThe central bank said the facility now will buy debt from counties and states with populations of at least 500,000 and cities with 250,000 residents or more.
Read more »
Fed Chair Powell steps back on the stageFederal Reserve Chairman Jay Powell steps back on the stage Wednesday with the latest FOMC announcement and press conference. But Powell's message is NOT likely to please President Trump.
Read more »
Fed to Extend Loans to More Cities, CountiesThe Fed will loosen eligibility criteria for its local government lending program, allowing more than 200 cities and counties to participate
Read more »