Build America Bonds Losing in Yield-Rise Bet

The $188 billion market for Build America Bonds is set to trail the rest of municipal debt for the first time as issuers face cuts to their federal subsidies while investors bet interest rates will rise.

The taxable debt created under President Barack Obama’s 2009 stimulus plan has lost 6.1 percent this year, compared with a 3.7 percent drop for the $3.7 trillion municipal market, Bank of America Merrill Lynch data show. The bonds beat all local debt in the first three full years of their existence as they drew buyers from across the fixed-income universe.

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