Rising BAB Redemptions
Build America Bonds were created as part of the 2009 American Recovery and Reinvestment Act. BABs are federally taxable municipal bonds issued during 2009 and 2010 for which up to 35% of the borrowing costs are federally subsidized either through payments to the issuer as Direct-Pay BABs or through payments to bondholders as Tax Credit BABs. The IRS estimates that more than $181 billion of BABs were issued by state and local governments, and Bloomberg data suggests that about $116 billion of BABs were still outstanding as of March 2024.
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