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July 20, 2009
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Treasury Releases Build America Bonds Update
Report Details Cumulative, State-by-State Bond Issuances to Date
Recovery Act Bond Program Boosts Economic Development
WASHINGTON – As part of the effort to increase transparency in government and maintain accountability of funds allocated under the American Recovery and Reinvestment Act (Recovery Act), the U.S. Department of Treasury is today providing an update on issuances of the Build America Bonds program, including state-by-state data. The Build America Bonds program is a new financing tool created by the Recovery Act to allow state and local governments to obtain much-needed funding, at lower borrowing costs, for projects such as construction of schools and hospitals, development of transportation infrastructure, and water and sewer upgrades.
"Creating the conditions for an economic recovery also requires addressing the challenges facing state and local governments," said Alan Krueger, Assistant Secretary of Economic Policy. "The Build America Bonds program is an innovative program that will help states and local governments that seek to finance building projects to turn things around by providing financing for projects at lower costs. By supporting the construction of schools, hospitals, roads, and environmental projects, the Build America Bonds program is helping communities build a foundation for a stronger economic future."
Build America Bonds are designed to appeal to a broader set of investors than traditional tax-exempt bonds. Under the Build America Bonds program, Treasury makes a direct payment to the state or local governmental issuer in an amount equal to 35 percent of the interest payment on the Build America Bonds. Potential investors include pension funds that traditionally do not hold tax exempt bonds and foreign investors. These investors have been important additions to the market for municipal debt.
Early market reception for Build America Bonds has been very positive. Since the program was launched on April 3, 2009:
- There has been $17.4 billion in Build America Bond issuance;
- Build America Bonds constitute about 16.6 percent of municipal bonds issuances since mid April; and
- A total of 34 states are participating in the program, with a total of 178 separate issues.
A complete list of issuances organized by state is available here.
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