State Street Global Advisors (SSgA) and Nuveen Investments recently formed an alliance to have Nuveen become the sub-adviser for municipal-bond SPDR exchange traded funds (ETFs). And once again, both investment firms are teaming up.
The SPDR Nuveen Barclays Capital Build America Bond ETF began trading on May 13 with the ticker symbol BABs.
Build America Bonds, or BABs, were created under the American Recovery and Reinvestment Act of 2009 to reduce the borrowing costs for state and local governments.
Under the program, the U.S. Treasury Department subsidizes 35 percent of the total coupon interest on Build America Bonds paid to investors.
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“Build America Bonds are a relatively new asset class; however, as investors and advisors have grown more familiar with these bonds, demand for diversified access to this segment of the municipal bond market has increased substantially,” said Anthony Rochte, senior managing director at State Street Global Advisors, in a statement.
According to Bloomberg, Build America Bonds are the fastest growing segment of the $2.8 trillion municipal bond market, accounting for around 26 percent of new bond issuance this year.