TMFBent (99.85)

Obama Rewards These Debt Speculators (on the down low)

May 04, 2009 – Comments (2)

Hey, easy to complain about those "speculators" in distressed Chrysler debt. But what about these instant profits? And the money left on the table by the municipalities?

I doubt you'll hear B.O. say "boo" about this.

Build America bonds are part of President Barack Obama’s American Recovery and Reinvestment Act passed earlier this year to create jobs building roads, schools and infrastructure. The government pays a 35 percent subsidy on the interest rates that can cut coupons below those in the tax-exempt market.

The rising prices of the securities and simultaneous decline in yields relative to benchmark rates shows municipalities would have saved another $1.32 billion in interest over the life of the bonds had they sold at current levels. The yields on $1.38 billion of debt sold by the New Jersey Turnpike Authority tumbled to 6.69 percent from 7.41 percent within a day of its April 20 offering.