What’s Going on in Bond Land: 2nd in a series – Build America Bonds

by Marilou Long on May 7, 2009

in Bonds,Credit Crisis

As part of the economic stimulus plan, state and local governments are authorized to issue debt for infrastructure projects and qualify for a rebate of 35% of the interest cost from the federal government.  The bonds are taxable to investors, so they are being purchased by investors that typically look at high grade corporate bonds such as pension funds or foreign governments.  This in the Wall Street Journal –  – provides a good summary of the program.

The maturities of the bonds issued so far have been fairly long at 25 to 30 years, so we have not been actively looking at them for client portfolios.  The bonds have performed well in after market trading.

 

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