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 Treasury Releases Build America Bonds Update


2/8/2010

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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.  

 

Table 1: BAB Issuances and Volumes
Time Period Number
Issues
Volume
$Millions Percent of
Muni Total
2009:      
April 12 7,632 20.1
May 41 2,699 8.3
June 85 4,968 10.9
July 70 3,532 12.9
August 107 9,632 24.5
September 112 6,795 20.7
October 111 12,940 29.6
November 105 7,482 16.1
December 98 8,016 27.8

April to December

741

63,697

19.0
     
2010:
January

93

7,070

21.3


Since BABs inception:

     
April 2009 to January 2010 834 70,767 19.2

Table 2:   BAB Issuances and Volumes by State as of 1/31/2010
State Number of
Issues
Total
Amount
Issued
($Millions)
AK 2 160
AL 4 202
AZ 13 645
CA 70 16,261
CO 19 1,486
CT 5 844
DC 3 956
DE 1 179
FL 27 2,922
GA 7 703
HI 2 91
IA 30 497
ID 1 72
IL 94 4,853
IN 17 751
KS 31 855
KY 32 1,436
LA 7 532
MA 5 1,963
MD 16 1,431
MI 35 1,394
MN 50 457
MO 31 1,484
MS 2 162
NC 7 698
ND 4 25
NE 16 378
NH 2 225
NJ 16 2,791
NM 3 96
NV 8 1,283
NY 18 6,540
OH 36 2,156
OK 12 299
OR 2 22
PA 21 1,996
SC 16 479
SD 8 143
TN 15 344
TX 34 7,194
UT 19 1,330
VA 17 1,468
VT 1 41
WA 28 2,035
WI 44 835
WV 1 38
WY 2 13
Total 834 70,767

###

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