Nearly a dozen Midwestern issuers have announced they can redeem almost $62 million of their Build America Bonds and other direct-pay bonds because the extraordinary redemption provisions were or will be triggered by sequestration cuts in the subsidy payments they receive from the federal government.

The 10 cities all disclosed their potential redemptions on the Municipal Securities Rulemaking Board's EMMA system in recent days. Their disclosures follow a trend that began in April, just one month after their payments were reduced as part of the $85 billion in across-the-board federal budget cuts mandated by sequestration. As a result, the payments, equal to 35% of interest costs for BABs, that Treasury was to pay issuers was cut by 8.7%.

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