Adviser: rising rates worsen timing for municipal issuance

The committee's municipal adviser presented a municipal market outlook noting recent rate increases across the yield curve and warned that the current environment is poor timing for issuing large debt.

"Interest rates across the municipal benchmark curve on the top left table have gone up about 40 basis points," the adviser said, calling out movement at both the short and long ends of the curve and noting that recent Fed tightening pushed short-term rates higher. He observed 10-year U.S. Treasuries were "hovering around 5.15%," and said those moves make timing "a bad move in terms of our timing for issuing bonds."

Members took the update as a factor in pursuing credit enhancements such as the moral-obligation pledge and discussed whether to wait for more favorable market conditions, or seek rating improvements that could offset higher underlying rates.