Muni Bonds Signal Trouble For State And Local Government Borrowing
Posted By thestatedtruth.com on December 13, 2010
This added interest expense should bust state and local budgets for next year. So what’s a borrower to do? Well to start…cut backs are in order across the board and that’s official!
Investors are demanding higher interest payments on municipal bonds in a race for year-end issuance.  Yields are pushing highest rates since 2009 while the Build America Bonds program appeared increasingly unlikely to be extended.
The purpose of Build America Bonds is to reduce the cost of borrowing for state and local government issuers and governmental agencies. Build America Bonds are taxable municipal bonds that carry special tax credits and federal subsidies for either the bond issuer or the bondholder. Build America Bonds were created under Section 1531 of Title I of Division B of the American Recovery and Reinvestment Act that U.S. President Barack Obama signed into law on February 17, 2009.
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