The Hedge Funds Weblog
Municipal Bond News Build America Bond Program
Municipal bonds are debt instruments that are issued by a city for the sake of raising funds for city related projects. Bonds are a promise to repay the principal amount of the bond plus any agreed interest on a specified date, or dates. Cities frequently will issue bonds when they are trying fund costly projects that they would otherwise be unable to complete.
The Build America Bond Program is part of the stimulus bill and is run by the U. S. Department of the Treasury. The program is part of the a plan to stimulate the economy by funding various state and city projects, including public buildings, courthouses, roads, schools, hospitals, water and sewer facilities, public safety facilities, public housing initiates, and energy/environmental projects that will result in more jobs and better living environments for families and their children. The program will allow state and local governments that issue bonds to have lower borrowing costs due to the Treasury departments subsidizing 35 percent of the interest payments. This means that state and local governments should have more success in their bond issuing due to being able to offer investors a more competitive interest rate than they would have without the Build America Bond Program.
Some recent municipal bond offerings under the Build America Bond Program include one held in Massachusetts. The city sold over $358 million in Build America Bonds that had a 21-year maturity or full repayment rate. The city allowed Citigroup, Inc. to handle the issuance of the bonds, which will be utilized for various public infrastructure projects. The city of Miami is also taking advantage of the program, with plans to issue $217 million in bonds to fund various public transportation projects.
People who are interested in investing should keep up to date on municipal bond news to find new investing projects.
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