WASHINGTON — Municipal bond dealers should consider advising customers that issuers of Build America Bonds may have the option to call those bonds starting Jan. 2 if federal interest subsidy payments are cut because Congress fails to address the "fiscal cliff."

In a notice sent by the Securities Industry and Financial Markets Association to its members Friday, the group said customers who purchase BABs and other direct-pay bonds could face investment losses if Congress does not avert "sequestration" that could result in $1.2 trillion in automatic spending cuts to the federal budget.

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