Stimulus Bond Program Proving Popular

Washington, DC, Dec. 29, 2009--Build America Bonds, which are being used to fund all kinds of municipal and school building projects, may double to $130 billion in 2010 as states and cities rush to borrow before Congress can change federal subsidies.

The U.S. government pays 35 percent of interest costs on taxable borrowing for local public works. The bond program was part of the federal stimulus package enacted earlier this year.

After reaching $64.3 billion since offerings began in April, new issues of Build America Bonds will more than double to $130 billion in 2010, equivalent to 30 percent of next year’s total sales of municipal debt, according to Loop Capital Markets, a Chicago-based investment bank and municipal underwriter.

The surge may be fueled by state and local governments racing to borrow if it seems likely that the level of the federa; subsidy will be reduced after the current program expires on Dec. 31, 2010.

Among industry groups lobbying for renewal of Build America Bonds are the National Association of Manufacturers and the American Society of Civil Engineers.