Municipal Liquidity Facility – Federal Reserve Board’s Guidance on the Expansion of the Scope and Duration of the MLF

    View Author May 2020

    As previously reported, on April 9, 2020, the Federal Reserve established a Municipal Liquidity Facility (MLF), which will purchase up to US$500 billion of short-term municipal notes (Eligible Notes) from selected states, counties, cities and, in accordance with the Federal Reserve Board’s Guidance, Multi-State Entities (Eligible Issuers). On April 27, 2020, the Federal Reserve Board filed a press release, updated term sheet, FAQs page and an appendix outlining the maximum amount of Eligible Notes the SPV will purchase per Eligible Issuer (the Federal Reserve Board’s Guidance). The Federal Reserve Board’s Guidance clarifies the Federal Reserve’s former term sheet and press release, sets forth the MLF’s expanded scope and duration, and addresses next steps for Eligible Issuers. The immediate purpose of the MLF is to address the cash management needs of Eligible Issuers, while also helping restore confidence in the municipal securities market.