The Municipal Securities Rulemaking Board is urging investors and dealers to examine the redemption provisions of Build America Bonds and other direct-pay bonds so they can determine if the bonds’ market value could be affected by a redemption stemming from a sequestration-mandated cut in subsidy payments to the issuer.

“In some cases, issuers of the bonds may have the right to redeem the bonds under certain extraordinary redemption provisions that should be analyzed carefully,” the board said in a release and notice explaining the concerns.

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