Taxpayers Prove Inferior to Shareholders With Obama's Build America BondsState and local governments, forced to close budget gaps by firing workers and shutting schools, may pay at least $4.2 billion more in interest than companies with similar credit ratings on Barack Obama's Build America Bonds.
The $17.4 billion of Build America Bonds sold since April pay an average yield that's 0.96 percentage point more than corporate
securities with the same ratings, according to data compiled by Bloomberg and based on the 25 largest deals. ``
securities with the same ratings, according to data compiled by Bloomberg and based on the 25 largest deals. ``
Taxpayers are taking it on the chin,'' said G. Joseph McLiney, president of Kansas City, Missouri-based McLiney & Co., a firm thatspecializes in selling municipal bonds that qualify for federal tax credits. ``There should be no spread.''
While Build America Bonds opened credit markets to municipalities after the collapse of Lehman Brothers Holdings Inc., states and citiesare being penalized compared with corporations, which are 90 times more likely to default than local governments, according to Moody's Investors Service.
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