Why is the Illinois State Toll Highway Authority selling Build America Bonds?
Basically, the tax code makes purchases of the Build America Bonds income tax deductible, so lots of municipalities expect people to buy the bonds so they can raise money for infrastructure projects. The ISTHA intends to use its $500 million dollar bond offering to rebuild the highways around Chicago. Sources: http://www.washingtonwatch.com/bills/show/111_SN_238.
Authority leads municipal borrowers today with a $500 million offering of taxable Build America Bonds to finance expansion and rebuilding of interstates in the greater Chicago area. The agency will offer 15-year securities that can be called after 10 years and 25-year bonds that can be redeemed before maturity only at a premium. Braintree, Massachusetts’s $122 million debt offering will be among today’s largest tax-exempt deals. This year’s Build America Bonds program, which rebates 35 percent of the interest costs on taxable bonds sold by state and local governments, hasn’t been enough to push overall municipal issuance ahead of last year’s pace. Municipal bond sales fell 14 percent through last week to $127.9 billion, compared with the comparable period in 2008, according to data cited by Merrill Lynch & Co. in a report yesterday. The bank cited a decline in variable-rate issues and refinancing deals this year, “The muni market continues to lag last year in issuance,” said Phil Fisch
