Revisiting WIFIA Sub-UST Interest Rates for SRFs

By John Ryan

The WIFIA loan program offers an interest rate derived from current U.S. Treasury (UST) yields at loan closing. Other large-scale federal infrastructure loan programs like TIFIA and CIFIA do the same. The underlying idea is that the loan should cover the government’s interest cost of funding it. The program’s appropriations can then be devoted primarily to offset expected credit losses. Since very few losses are expected from investment-grade loans to infrastructure projects, WIFIA’s surprisingly small annual appropriations can go a long way. It’s not a bad approach to federal infrastructure lending in general.