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Build America Bonds Monthly Issuance Data For August

SIFMA recently released monthly bond issuance data on Build America Bonds to August 2010.

For Excel report, click link below.

BABs Monthly Issuance Data  

Build America Bonds (BABs) are taxable municipal bonds that were authorized under the American Recovery and Reinvestment Act of 2009 (ARRA) that President Obama signed into law on February 17, 2009. BABs are an alternative to tax-exempt bonds for state and local governments that may be issued in 2009 and 2010. The interest on BABs is taxable to investors. As a result, the nominal interest rate on BABs is about the same as interest paid by non-state and local government borrowers, such as corporations. To make up for the benefit associated with the tax-exemption, the federal government provides two options to BAB issuers to lower their net interest costs.

  • With direct-pay BABs the Treasury Department provides borrowers with cash subsidy payments equal to 35 percent of their interest costs.
  • With tax-credit BABs, investors receive the right to a federal income tax credit equal to 35 percent of their BAB interest income. However, all BAB issuance to date has been direct pay.

The program is set to expire at the end of 2010, but a bill is in Congress to extend the legislation for two years with a reduced tax credit equal to a 32 percent subsidy in 2011, and 30 percent subsidy in 2012.

For SIFMAs BABs fact sheet for second quarter 2010, click link below

SIFMA Second Quarter Fact Sheet