Far West

Bond lawyers are urging the Treasury Department and the Internal Revenue Service to avoid issuing new guidance to address whether Build America Bonds issued by a state or locality would continue to exist, or be considered “extinguished,” if they were purchased by a related entity such as the public pension fund or state lottery.

The National Association of Bond Lawyers is urging the Treasury Department and the Internal Revenue Service to include, as a priority, guidance on whether the benefits provided to bonds issued under the stimulus law would apply to refundings of those bonds.

SAN FRANCISCO — Moody’s Investors Service downgraded the long-term underlying rating on the California Housing Finance Agency’s home mortgage revenue bonds to Baa1 from A3, affecting $5.7 billion of outstanding debt.

When the Build America Bond program ended there were two schools of thought. One argued that BABs would become an orphan class, with prices in the secondary market suffering from illiquidity. Another group thought there would be some scarcity value to the product and they would appreciate in value.

SAN FRANCISCO — Citi said in a report released Monday that long-dated capital appreciation bonds issued by California school districts offer an opportunity for investors despite concerns about education funding. The zero-coupon bonds are cheap when compared to current coupon securities, the firm said.

A coalition of House Democrats is calling for Build America Bonds, a national infrastructure bank, and high-speed rail as part of a plan to improve transportation and stimulate job growth.

WASHINGTON Three former officials from CDR Financial Products Inc. are urging a federal judge to dismiss the Justice Department’s charges against them, arguing prosecutors should not proceed to trial on a fraud theory the Supreme Court rejected last year.

The top Democrat on the House tax-writing committee defended itemized tax deductions Friday that would be repealed under some tax reform proposals, but did not take a position on whether to maintain the federal tax exemption for interest earnings from state and local bonds.

SAN FRANCISCO — Washington State lawmakers have passed a budget that closed an almost $5 billion hole for the upcoming two fiscal years and includes a compromise on reducing the debt limit.

WASHINGTON — State revenues are expected to rise in fiscal years 2011 and 2012, but a record jump in Medicaid costs, combined with voters’ reluctance to take on new debt, could keep states from issuing bonds for infrastructure and other investment projects, officials and market participants said Thursday.