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TG-538

Build America Bonds Provide More Than $70 Billion Nationally to Date
Report Details Cumulative, State by State Bond Issuances
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 Treasury Department today provided another comprehensive 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.

Build America Bonds are designed to appeal to a broader set of investors than traditional tax-exempt bonds. Under the Build America Bonds program, the Treasury Department 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.

The Obama Administration's FY 2011 budget proposes to make Build America Bonds permanent with a 28 percent subsidy rate that is estimated to be revenue neutral.   The budget also proposes expanding the eligible uses of Build America Bonds, allowing them to support financing for nonprofits and a wider range of municipal borrowing.  

"Expanding and making permanent this successful Recovery Act program will provide certainty and improve the long term functioning of the municipal bonds market," said Alan B. Krueger, Assistant Secretary for Economic Policy at the Treasury Department.

Early market reception for Build America Bonds has been very positive.  Between the program launch on April 3, 2009 and January 31, 2010:

·          There have been $70.8 billion in Build America Bond issuances;

·          Build America Bonds now constitute about 19.2 percent of the municipal bonds market; and

·          There have been a total of 834 separate issues of Build American Bonds by local or state governments in 47 states.

The data contained in this report are compiled by the Department of the Treasury using data available from Bloomberg and are not based on filings with the Internal Revenue Service.  

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REPORTS

• A complete list of issuances