Build America Bonds

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Build America Bonds are taxable

American Recovery and Reinvestment Act that U.S. President Barack Obama signed into law on February 17, 2009.[1][2][3] The program expired December 31, 2010.[4]

Purpose of and eligibility for Build America Bonds

The purpose of Build America Bonds, commonly referred to as BABs, is to reduce the cost of borrowing for state and local government issuers and

501(c)(3) organizations, were not eligible to use the Build America Bond program. The program was only open to new issue capital expenditure bonds issued before January 1, 2011; BABs could not be issued for refinancing transactions.[1]

Build America Bonds can provide states and localities with substantial savings on their borrowing costs. According to the United States Department of the Treasury, the savings for a 10-year bond are estimated to be 31 basis points and the savings for a 30-year bond are estimated to be 112 basis points versus traditional tax-exempt financing.[5]

Types of Build America Bonds

There are two types of Build America Bonds (often abbreviated as BABs): "Tax Credit BABs" and "Direct Payment BABs."

corporate bonds; in many cases, it is more cost effective than issuing traditional tax-exempt bonds.[7][8]

Investors

While Build America Bonds are taxable

commercial banks.[1]

Issuance

From the time of the program's inception in April 2009, through the end of the program at the end of 2010, a total of US$181 billion of Build America Bonds were issued.[9]

See also

References

  1. ^ a b c [1][permanent dead link]
  2. ^ Internal Revenue Service. "IRS Issues Guidance on New Build America Bonds" Retrieved on December 12, 2016.
  3. ^ "Treasury Analysis of Build America Bonds Issuance and Savings" (PDF). Treasury.gov. Retrieved July 29, 2014.
  4. ^ States to lose Build America Bonds program in 2011, Money.cnn.com, Retrieved on January 17, 2011
  5. ^ Rios, Rosie (2010-01-22). "The Recovery Act at Work: Build America Bonds". Washington, DC: United States Department of the Treasury. p. 5. Archived from the original on 2010-08-28. Retrieved 2010-08-03.
  6. ^ a b Internal Revenue Service. "Notice 2009-26, Part III: Build America Bonds and Direct Payment Subsidy Implementation" Retrieved on May 31, 2009.
  7. ^ [2][permanent dead link]
  8. Wall Street Journal
    . April 29, 2009. Retrieved on May 31, 2009.
  9. ^ "Treasury Recovery Act - Build America Bonds Data" (Press release). United States Department of the Treasury. 2010-12-06. Archived from the original on 2010-12-18. Retrieved 2010-12-17.
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