TRENTON, NJ—The Murphy administration announced on Tuesday that it has implemented a backstop municipal note program through the New Jersey Infrastructure Bank (I-Bank) to assist Garden State municipalities impacted by COVID-19 and the volatile bond markets.
The I-Bank’s $50-million Bond Anticipation Note (BAN) Program provides liquidity for municipalities in New Jersey that experience difficulty rolling over bond anticipation notes in today’s volatile, disruptive municipal bond market. The program is designed to help mitigate financial impacts to municipalities during the Coronavirus state of emergency, launched in New Jersey on April 15.
“Governor Murphy and I are grateful that New Jersey’s I-Bank is able to step up in these uncertain times to help maintain fiscal solvency in all 565 of our municipalities,” says Lt. Governor Sheila Y. Oliver, who serves as Department of Community Affairs Commissioner. “This investment will help calm concerns in our local government units about market volatility. DCA is proud to partner with I-Bank and the New Jersey Department of Treasury to promote economic stability as we ride out this unprecedented crisis.”
New Jersey’s I-Bank has amended its investment policy to permit it to invest in local government unit bond anticipation notes in certain circumstances. The BAN purchase program is a limited and specialized resource made available only to participants in I-Bank-associated financing programs to address failed sales occurring during bond anticipation note rollovers.
The program is designed to ensure solvency and fiscal stability for New Jersey’s local government units, providing protection against potential defaults during the present liquidity crisis.
Its general terms are:
• The program is of limited duration, authorized only during a period in which the governor has declared a State of Emergency.
• Only those BAN rollovers that require assistance, as defined by I-Bank, may participate.
• Members of the I-Bank, Treasurer’s Office, and the financial advisor to the I-Bank shall determine the appropriate amount of available funds and liquidity to be invested.
• There will be sector, issue, and credit limits, interest rate guidelines, and a maturity limit of 90 days for any bond anticipation note submitted for consideration.
• The Director of the Division of Investments in the New Jersey Department of Treasury must approve the purchase of any BAN through the program.