At a conference, municipal bond professionals praised the American Recovery and Reinvestment Act for reviving the market. Enacted in February, the legislation includes a series of bond provisions that offer subsidies for some types of issuance, open markets to municipal issuers and offer an alternative minimum tax break for interest on private-activity bonds. Included in the act is the Build America Bonds program, which allows municipal bond issuers to sell taxable debt and collect a 35% subsidy from the Treasury. "Build America Bonds are for the municipal finance market what the 'Cash for Clunkers' was for the automotive industry," said Cadmus Hicks, a managing director at Nuveen Investments.

Related Summaries