Oct 22 (Reuters) – New Jersey plans to sell $4 billion of bonds in the U.S. municipal market to plug a hole in its coronavirus-hit budget instead of borrowing through a Federal Reserve loan program, a state spokeswoman said on Thursday.
Jennifer Sciortino, communications director for the New Jersey Treasurer’s office, said the current plan to use the market, which is subject to market conditions, was recommended by a bond underwriter.
“Bank of America’s initial response to our (request for proposals) recommended selling $2 billion in debt through the public markets and seeking $2 billion through the federal Municipal Liquidity Facility (MLF),” she said in an email. “However, markets have improved since Bank of America’s initial recommendation and they have subsequently recommended that we go to the public market.”
The state was authorized to take out a three-year loan through the MLF, which the Fed created in April as a way for states and local governments to access cash as their revenue fell in the wake of the virus pandemic. New Jersey is also able to sell bonds due in 12 years in the market.
Details on the timing for the bond sale were not immediately available.
As of the end of September, only Illinois, the lowest-rated U.S. state, and New York’s Metropolitan Transportation Authority, which was hit hard by a ridership drop due to the pandemic, had tapped the MLF for loans, according to a Fed report to Congress.
The MLF, which is scheduled to end on Dec. 31, is one of around a dozen emergency credit facilities launched by the central bank this year to help ease the blow from the pandemic.
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