Source: Edward Friedman, Regional Financial Review, July 2018
Although the possibility of near-term federal legislation to boost infrastructure spending is fading, the need to address the nation’s aging roads, bridges, and other public works is as pressing as ever. Financing is the sticking point. After an initial flurry of interest, no progress has occurred on so-called public-private partnerships. Inevitably, the focus has shifted back to the municipal bond market as the vehicle. Unfortunately, tax reform has hindered rather than helped the market by reducing its tax advantages. This article will provide evidence that the market is also relatively illiquid and will show how that is also an impediment. However, recent regulatory changes offer the prospect that liquidity in the form of institutional participation in the market is set to rise.