John Bellows, Acting Assistant Secretary for Economic Policy, has a post on the US treasury blog calling for the reintroduction of Build America Bonds. It’s quite interesting — honest.
Babs expired in December 2010, but the President’s FY2012 budget asks for their reintroduction. They were popular. There were 2,275 separate issues totaling $181bn, $30bn more than the total grants given to state and local governments also included as part of the Recovery Act. Read more
Pimco’s Bill Gross last week poured $4.4m of his own money into the municipal bond market in the States — which would be, you know, that thing that’s been tanking ever since the Build America Bond programme looked set to expire.
Here’s the stuff he’s been buying: Read more
Yields on long-term municipal bonds have risen to the highest levels in more than a year as the market grapples with the likely removal of the Build America Bonds subsidy, the FT reports. Moves to amend tax cuts legislation to extend the program via a lower subsidy rate may not be included in a final Senate vote on Tuesday. Longer-maturity muni bonds have particularly suffered because these issues would return to the traditional tax-exempt market if taxable BABs fall, the WSJ says. But institutional investors may be looking for value even as retail investors abandon the market: a SEC filing shows that Bill Gross of Pimco bought shares in five of his firm’s muni bond funds recently, the Journal adds.
Think the Build America Bonds story is just about the US?
Think again. Read more
California and the New Jersey Turnpike Authority are among several issuers hoping investors will buy ‘Build America bonds’, a new form of federally approved funding unveiled earlier this month by the US Treasury
These bonds are intended to support the stressed municipal bond market, which has been hurt by the collapse of the bond insurance industry and by the disruption in the market for auction rate securities and variable-rate demand notes (VRDNs). Read more