WASHINGTON — The Obama administration’s proposal to lower the subsidy rate for Build America Bonds to 28% is creating investor uncertainty and could hinder the program, California Treasurer Bill Lockyer warned Sen. Barbara Boxer this week.

In a three-page letter sent to the California Democrat, Lockyer said the administration’s proposal to permanently extend the program at the 28% rather than then 35% subsidy rate could reduce market access and raise rates for BAB issuers, since the relative economic value of BABs versus traditional tax-exempt bonds at a lower rate would be “very uncertain.”

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