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 Treasury Releases Build America Bonds Update Build America Bonds Provide Nearly $78 Billion Nationally to Date


3/4/2010

TG-575


Report Details Cumulative, State by State Bond Issuances
Recovery Act Bond Program Boosts Economic Development

WASHINGTON – The Treasury Department today released its monthly comprehensive update on issuances of the Build America Bonds program, including state-by-state data.   The Build America Bonds program is a financing tool created by the American Recovery and Reinvestment Act to allow state and local governments to obtain much-needed funding, at lower borrowing costs, for new capital projects such as construction of schools and hospitals, development of transportation infrastructure, and water and sewer upgrades.

Build America Bonds, which are taxable 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 new investors include pension funds that typically do not hold tax exempt bonds and foreign investors.   These investors have been important additions to the market for municipal debt.

"Build America Bonds have changed the landscape of the municipal bond market by opening it to a broader range of investors," said Alan B. Krueger, Assistant Secretary for Economic Policy at the Treasury Department.   "Expanding and making this program permanent, as the President proposed in the budget, will further improve the long-term functioning of the municipal bonds market."  

The Obama Administration's FY 2011 budget proposes to make Build America Bonds permanent with a 28 percent subsidy rate; this rate is estimated to be revenue neutral relative to the estimated future Federal tax expenditure for tax-exempt bonds.   The budget also proposes expanding the eligible uses of Build America Bonds to cover a wider range of municipal borrowing, including original financings for public capital projects, current refundings for public capital projects, short-term working capital, and nonprofit 501(c)(3) organization financings.  

Market reception for Build America Bonds has been very positive.   Between the program launch on April 3, 2009 and February 28, 2010:

· There have been nearly $78 billion in Build America Bond issuances;

· Build America Bonds now constitute about 20 percent of the municipal bonds market; and

· There have been a total of 929 separate issues of Build America Bonds by local or state governments in 47 states.

A complete list of issuances organized by state is available here.

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

106

7,539

16.2

December

98

8,015

27.8

April to December

742

63,753

19.1


2010:

 

 

 

January

95

7,074

21.3

February

92

7,165

25.5

January to February

187

14,239

23.2


Since BABs inception:

 

 

 

April 2009 to February 2010

929

77,992

19.7

 

 

Table 2:   BAB Issuances and Volumes by State Between Program Inception (4/3/2009) and 2/28/2010
State Number of
Issues
Total
Amount
Issued
($Millions)
AK 2 160
AL 5 208
AZ 16 685
CA 76 18,059
CO 23 1,654
CT 6 885
DC 3 956
DE 1 179
FL 32 3,245
GA 7 703
HI 3 591
IA 30 497
ID 1 72
IL 109 5,052
IN 19 1,265
KS 34 999
KY 36 1,452
LA 7 532
MA 5 1,963
MD 20 1,906
MI 37 1,413
MN 58 627
MO 34 1,551
MS 2 162
NC 7 698
ND 4 25
NE 16 378
NH 2 225
NJ 16 2,791
NM 3 96
NV 11 1,837
NY 24 7,859
OH 41 2,362
OK 12 299
OR 2 22
PA 22 2,025
SC 16 479
SD 8 143
TN 15 344
TX 35 7,207
UT 23 1,494
VA 18 1,724
VT 2 50
WA 30 2,157
WI 53 910
WV 1 38
WY 2 13
Total 929 77,992
 

Source:   Department of Treasury calculations.  Muni total includes traditional tax exempt bonds, Build American Bonds, and other ARRA bonds.

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