Build America Bonds, introduced two years ago as part of President Barack Obama’s stimulus legislation, helped make 2010 a record year in public finance, says Roger Davis, public finance chair at Orrick, Herrington & Sutcliffe. Last year, the value of new bond issues soared to $433.3 billion, a 5.8 percent increase from 2009, and the highest value ever in the history of public debt issuance.
Davis says the record year reflected both the need for state and local infrastructure and the popularity of the BABs. (The federal government subsidized 35 percent of the interest of BABs that were issued for building projects.) The BABs had other perks, too. Pension funds and foreign banks were able to buy them. In fact, more than $117.4 billion worth of BABs were issued in 2010, about 27 percent of last year’s overall value in municipal offerings.
