| Friday, May 31, 2024 |
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MANAGING DIRECTOR: |
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US Treasury Market |
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| Date | 1 mo | 3 mo | 6 mo | 1 yr | 2 yr | 3 yr | 5 yr | 7 yr | 10 yr | 20 yr | 30 yr |
| 05/23/24 | 5.37 | 5.41 | 5.39 | 5.20 | 4.94 | 4.71 | 4.53 | 4.50 | 4.48 | 4.66 | 4.58 |
| 05/24/24 | 5.38 | 5.41 | 5.39 | 5.20 | 4.95 | 4.72 | 4.53 | 4.49 | 4.47 | 4.66 | 4.57 |
| 05/28/24 | 5.37 | 5.40 | 5.38 | 5.22 | 4.97 | 4.76 | 4.59 | 4.57 | 4.55 | 4.75 | 4.66 |
| 05/29/24 | 5.37 | 5.41 | 5.39 | 5.21 | 4.97 | 4.79 | 4.63 | 4.63 | 4.61 | 4.82 | 4.73 |
| 05/30/24 | 5.37 | 5.41 | 5.38 | 5.19 | 4.92 | 4.73 | 4.56 | 4.56 | 4.54 | 4.76 | 4.68 |
The data in the table above is static as of the time it was pulled, so rates may have changed. Treat all data in this table and PMR as indications only and availability is
always subject to change. This information was pulled manually from sources we believe to be reliable. New source, as of 12/12/2022, Bloomberg, L.L.P. As of: close of business 5/30/2024.
Is This 1986???
It’s been nearly forty years since the Tax Reform Act of 1986 introduced the concept of “bank qualified” municipal bonds. Initial versions of the Act attempted to strip commercial banks of their ability to invest in tax-free municipal bonds while still deducting their cost to carry them, but a last-minute revision provided the exception for municipalities borrowing less than $10 million per year. As most of us are aware, that exemption allows commercial banks to deduct 80% of the carrying cost for qualified tax-exempt obligations, making those securities far more tax-advantageous for banks to own.
But clearly, $10 million dollars in 1986 is a far cry from $10 million dollars today. This limit has significantly whittled down the universe of municipalities that can meet their financing needs with $10 million or less per annum. The chart below demonstrates how bank qualified issuance has been impacted in the last 10 years as fewer and fewer municipalities can qualify. This makes it far more challenging to find bank qualified munis that meet your portfolio’s state-specific, maturity, coupon and credit objectives.
Recently, a bill sponsored by US Rep. Terri Sewell (D-AL) has been reintroduced to expand the use of tax-exempt bonds for local governments and non-profits. The Local Infrastructure Financing Tools (LIFT) Act would restore the ability to advance refund municipal bonds (which was eliminated in 2017), increase the maximum bond issuance for bank qualified issuers to $30 million per year, and create a new taxable “direct pay” bond similar to the taxable Build America Bonds which were issued in 2009-2010.
We believe an increase in the bank-qualified limit is long overdue and would benefit many small local governments as well as providing commercial banks broader options for investing in their communities.
The LIFT Act will be referred to the House Committee on Ways and Means and advocates will be working to identify a potential pathway for consideration of the bill. If you agree that this would be beneficial to your financial institution and your local issuing bodies, please join us in reaching out to your members of Congress to encourage their support of the LIFT Act. If you have further questions about this bill or there is anything else we can help you with, please reach out to your CMG representative.
This information is intended for institutional investors only. The material provided in this document/presentation is for informational purposes only and is intended solely for private use. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instruments.
•Not FDIC Insured •No Bank Guarantee •May Lose Value