WASHINGTON — The Internal Revenue Service on Thursday allocated $400 million of qualified zone academy bonds to states and U.S. territories for 2011.

The QZABs can only be issued this year as taxable tax-credit bonds. While the new tax law enacted late last year authorized $400 million more of the bonds, it prohibited them from being issued with a direct-pay option, similar to Build America Bonds. With direct-pay bonds, the Treasury Department makes subsidy payments to issuers equal to a certain percentage of interest costs, in lieu of bondholders receiving tax credits.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.