March 3, 2010: Transition Time for TALF
March 3rd, 2010
This week, one the myriad of government programs that was hatched to provide “stimulus” is handing the proverbial baton back to the private sector. CIT Group, who emerged from bankruptcy in December 2009 and hired John Thain as CEO, is selling $667 million in bonds backed by equipment leases this week. Additionally, SLM, the student loan lender, is selling $1.55 Billion in bonds backed by loans this week; reportedly without government guarantees. Total private sector bond issuance this week is expected to reach $7 Billion, according to Bloomberg.
TALF (Term Auction Loan Facility) officially ends on March 4. The program was born in March 2009 and help pave the way for $178 Billion in debt issuance during last year, according to B of A Merrill Lynch and Bloomberg.
While there are other massive government programs still in force, the Fed’s recent action in raising the discount rate coupled with tomorrow’s shutting down of TALF will be a real test of the market’s ability to maintain balance without federal training wheels.
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