Muni market hopes its agenda makes reconciliation bill

A busy summer Friday in muniland. The muni market has another shot in getting its priorities passed, the Supreme Court issues a ruling that impacts bond proceeds, and Massachusetts prepares a large social issue.

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As Senate Democrats work to revive a reconciliation spending package, municipal bond lobbyists hope for a fresh opportunity to push through the federal muni agenda. The negotiations mark the latest move in a months-long process to all Democrats on board with a slimmed-down Build Back Better package that would feature lowered drug costs, billions to fight climate change, and increased taxes.

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The Supreme Court ruled last month that if a state chooses to subsidize private education, it cannot disqualify some private schools solely because of religious affiliation. The ruling could change the way some issuers go about certain financings, public finance lawyers said. “Some [issuer] statutes have restrictions in them against bond proceeds being used for religious purposes and some of those may now be unconstitutional given this case, which struck down Maine’s restrictions against using the aid program for sectarian institutions,” said Jenna Magan, partner and co-head of Orrick’s public finance group.

Massachusetts plans to bring $2.7 billion of taxable business-tax backed special obligation revenue bonds with a social designation, marking the largest environmental, social and governance deal to date in the municipal market. The deal is also one of the larger taxable deals in 2022 amid a drop in nissuance.

Steven Permut entered the municipal finance industry in 1982, fresh out of the State University of New York at Oneonta, where he graduated with a bachelor of arts degree in business economics and geography. His plans to become a cartographer were accidentally derailed and thanks to fate he just completed a 40-year career in municipal bonds.

Municipals were mixed to close out a quiet summer Friday session ahead of a larger new-issue calendar that sees several billion-dollar deals. Triple-A benchmark yields once again largely ignored a selloff in U.S. Treasuries after a robust jobs report indicated the Federal Reserve will likely hike interest rates another 75 basis points at its next meeting.?