Record Build America Bonds Rally Defies Subsidy Cut: Muni Credit
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The $188 billion Build America Bond market is extending a record rally as investors bet that municipal issuers repairing their finances can withstand reduced federal subsidies on the debt.
Under so-called sequestration that began March 1, $85 billion in federal spending cuts will be made for the fiscal year ending Sept. 30. That includes reducing the originally promised 35 percent subsidy on Build America Bonds to about 32 percent for U.S. states and cities from Hawaii to Maine.