As the European economies struggle, the ECB has hinted of more aggressive monetary stimulus in the form of lower rates and quantitative easing. Thirty year bonds in France and Germany now yield 2.20 and 1.73 respectively. With negative deposit rates, European Banks are encouraged to lend/invest their excess reserves. Many of them have been buying European bonds, helping to drive the prices up and yields down.

Many of these same banks are active lenders in the US markets, specifically to municipal projects. As lending/investment opportunities become less attractive in Europe, their presence in the US may increase. 

As an example, the Florida Department of Transportation (Fla DOT) recently borrowed close to 500 million dollars from a consortium of foreign banks including Soc Gen and Credit Agricole to complete the Interstate 4 Project. In the past, Florida DOT would have issued a muncipal bond to raise this capital. In today's market, a new issue for this project would have cost them approximately 4.5% plus issuance costs as compared to the bank consortium rate of 4%.

Direct bank lending to Municipalities has increased over the past few years and some estimate this to be 60 billion per year. As rates drop in Europe, European banks may become more active lending to municipal projects. This activity highlights the fact that municipal yields for long term projects like this are attractive relative to other investment alternatives. Curiously, the bank activity will reduce the need for primary issuance.