The Division of Local Government Services notified Chief Financial Officers of new State and Federal programs related to enhancing liquidity in the municipal debt market. On the federal level, the Federal Reserve has expanded the Money Market Liquidity Market fund to include municipal securities, specifically notes with less than 12 months’ maturities, as eligible collateral. At the time of purchase, the municipality must have AA or above rating.
On the state level, the New Jersey Infrastructure Bank (I-Bank) will invest in local government Bond Anticipation Notes (BANs) in certain circumstances. The program is limited to the period of the Governor’s declared emergency and for BAN rollovers with failed sales. The I-Bank, Treasurer’s Office and I-Bank Financial Advisor will determine the appropriate amount of funds available/liquidity to invest. There will be sector, issue, and credit limits, interest rate guidelines, and a maturity limit of 90 days for any BAN submitted for consideration.
If you are planning to go out to bonds or notes during this time we suggest you review this notice with your Chief Financial Officer, financial advisor and/or bond counsel.