Build America Bonds (BABs) are taxable bonds that municipalities issued for capital projects, receiving a 35 percent subsidy payment from the government to reduce borrowing costs.
While the Build America Bond program expired, Breckinridge believes that it opens the door to a new chapter in municipal bond investing. While the federal government remains committed to subsidizing municipal borrowing, it is no longer wedded to doing so only by exempting municipal bond interest.
The federal government created the Build America Bond program within the fiscal stimulus legislation to address the high cost of borrowing for municipalities. The long duration and high quality of Build America Bonds is very appealing to taxable fixed-income investors like insurance companies, endowments and pension funds.
Taxable Muni FAQs
