Wells Fargo Launches Build America Bond Index

According to a press release, Wells Fargo described the index as a “comprehensive, rules-based index measuring the performance of certain types of municipal bonds issued under the American Recovery and Reinvestment Act of 2009.” 

The Build America Bond program authorizes state and local governments to issue Build America Bonds (BAB) as taxable municipal bonds in 2009 and 2010 to finance any governmental purpose for which they otherwise could issue tax-exempt government bonds (other than private activity bonds). As of August 21, the BAB market has grown to roughly $27 billion in originations, according to the announcement.

The index is market capitalization-weighted and rule-based to provide diversified exposure in the market, is priced daily, and is available on Bloomberg Professional Service by typing BABS Index.

“Build America Bonds are a vital step in the evolution of the Municipal Bond market,” said Dan Forth, head of strategic indexing for Wells Fargo. “The Wells Fargo Build America Bond Index will help educate investors and advisers by providing additional transparency for this emerging asset class and is another way for our clients to monitor this growing market.”