Municipal Market Participants Shocked By New LCR Definitions

Citi Research analysts George Friedlander, Mikhail Foux and Vikram Rai give an overview of the municipal market in their work “Municipals Snap Back…” of October 25, 2013. Affects of NPR on municipal market This article will focus on their perceptive views on the implications of the new NPR issued by the Fed regarding the Liquidity Cover Ratio for banks for municipal bonds in the above paper. Municipal market participants are aghast that the Fed’s definition of ‘High Quality Liquid Assets’ – eligible assets that would determine a bank’s ability to withstand a stress event – does not include even the…