President Barack Obama may be the worst thing that ever happened to the tax-exempt bond market and, so far, states and municipalities are loving it.
Build America bonds, taxable securities that pay 1 percentage point more in interest than corporate debt on average, are such a hit with investors that the government is already considering expanding the program, according to John J. Cross, the Treasury’s tax legislative counsel. Municipalities sold $14.4 billion of the securities and Barclays analysts predict the amount will grow 10-fold because the federal government helps pay the bonds’ interest.
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