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| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| More |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Build America Bonds: Safe Play in Bondland? |
FOX BUSINESS - July 26, 2010 - by Gail Buckner
In case you haven’t noticed, there are BABs in Bondland.
“Build America Bonds” were created by Congress under The American Recovery and Reinvestment Act passed last year.(1) They’re municipals with a twist: unlike traditional bonds issued by state and local governments, the interest on BABs is taxable instead of tax-free. As you might expect, this makes them pretty unattractive to typical muni investors, that is, folks in the top tax brackets looking to avoid losing more than a third of the interest earned to federal income tax.
None-the-less, non-traditional buyers, those who pay no or little federal income tax, are snapping them up.
Craig Brandon, manager of Eaton Vance’s Build America Bonds mutual fund, says BABs have created “a whole new market” of municipal-bond investors, including pension funds, foreign governments and corporations, as well as individual investors in the lower tax brackets.
To make it more affordable for cash-strapped cities and states to take on new debt, the federal government is picking up part of the interest- a total of 35-percentage points.(2) Thus, if the interest on a BAB is 5%, the cost to the issuer is 4.65% (5.00%-.35%). The investor, of course, receives the full 5%.
According to Mallas, approximately $121 billion of BABs have been issued since the first one came out in April 2009. By law, the money raised must be used to fund construction projects; fulfilling the goal of “stimulating” the economy by creating jobs.
So what’s not to love?
For one thing, just because the federal government is subsidizing the interest payments, don’t confuse a BAB with a Treasury bond.
“We’re hearing that retail investors think this is security guaranteed by the U.S. treasury or U.S. government,” says Mallas. “It’s not.” Neither the interest payments nor the return of principal are guaranteed, although he stresses that the municipal bond market has historically had a very low default rate.
For the complete article visit FOX BUSINESS
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