Is soaring municipal bond issuance a bad sign for US water spending?

摘要

Amid the ongoing strain that the pandemic is placing on local government finances, the volume of tax-exempt municipal bonds issued for water and sewer projects in the US last year reached its highest level since 2016. Data provided to GWI by financial market data firm Refinitiv reveals that $40.6 billion in municipal debt was issued for water and sewer projects in 2020 - a 17% increase from the $34.6 billion issued in 2019. Observers suggest that this increase was largely down to the US Federal Reserve's decision to cut interest rates to a range of zero to 0.25% in March 2020 to offset an economic slowdown during the COVID-19 pandemic. "Many of our clients took advantage of the historically low interest rates to secure financing in 2020," John Mastrac-chio, vice president at utility consulting firm Raftelis, told GWI. "Some clients have shifted to paying for capital with more debt, and less cash, to take advantage of the low rates. If rates stay low, we could see more of the same in 2021."