States aren’t borrowing as much money to fund roads, airports, bridges and other pieces of infrastructure because they’re waiting to see what the Trump administration and Congress will propose in a coming infrastructure spending bill. There haven’t been many details on the plan, other than that the president has promised to spend a lot of money on rebuilding American infrastructure.
Reuters journalists Robin Respaut and Hilary Russ report:
New deals have lagged since November’s post-election selloff, when state and local governments quickly issued bonds fearing potential policy changes and rate increases by the Federal Reserve.
Since then, the lower issuance has been driven by plummeting refunding volumes. Such refinancings dominated last year’s higher issuance levels, but the states and cities that sell such bonds were put off by the overall rise in rates.
“I think people started to realize that the agenda within the Trump administration wasn’t going to accelerate as quickly as had been advertised,” said Randy Gerardes, director of municipal securities research at Wells Fargo in New York.
That is discouraging news for commuters, travelers and the transportation industry that must contend with yawning gap of new projects and maintenance across the country. The American Society of Civil Engineers this year assigned a D+ grade to U.S. infrastructure.
The Trump administration has announced a 10-year $1 trillion infrastructure plan financed through $200 billion in government funding, underpinned by private investment.
While states and cities build most of the country’s public infrastructure, they rely on stable and predictable funding from the federal government to help complete those projects.
Historically, the U.S. financed the vast majority of its infrastructure through the tax-exempt, low-cost vehicle of the $3.8 trillion U.S. municipal bond market.
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