Rate Climate Could Trigger More Refundings, Merrill Analyst Says

Fine, Jacob
September 2004
Bond Buyer;9/15/2004, Vol. 349 Issue 31969, p1
Trade Publication
The article reports that rising short-term interest rates due to the U.S. Federal Reserve Board's tightening of monetary policy, along with declining or stable long-term rates due to subdued inflationary pressures, could provide a boost to municipal refunding volume. Floating-rate issuance has surged in recent years as short-term interest rates have offered issuers historically large cost savings over long-term rates. Now, with short-term rates rising since policymakers began raising interest rates this year, that shift could begin to slow as the incentive for issuers to finance at longer-term rates grows.


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