The Federal Reserve Board ("FRB") revised the Municipal Liquidity Facility
("MLF") to expand the scope of eligibility and update
rating requirements.
According to the FRB, the MLF will purchase up to $500 billion
in short-term notes issued by U.S. states, cities and counties that
meet certain population thresholds. By this action, FRB intends to
improve liquidity in the wake of the COVID-19 pandemic. Under the
expanded MLF, the FRB will (i) decrease the population thresholds
so counties and cities with populations exceeding 500,000 residents
and 250,000 residents, respectively, can borrow directly through
the MLF; (ii) require eligible issuers to have had investment grade
ratings from at least two "major nationally recognized
statistical rating organizations" as of April 8, 2020; (iii)
increase the maximum maturity of the purchased notes from 24 months
to 36 months; and (iv) extend the MLF through December 31,
2020.
