States issued 10.3% more debt in 2009 — $460 billion — than the $417 billion issued in 2008, and debt likely will rise again this year, Moody’s Investors Service said in a report.

In 2008, debt issuance rose 4.7%. Moody’s said several factors contributed to the rise: pent-up demand after states cut back on issuance in the fall of 2008; the introduction of Build America Bonds and qualified school construction bonds through provisions of the American Recovery and Reinvestment Act, which created unprecedented incentives for municipal issuers; the need for budget relief as a result of the national recession; and a low interest rate environment.

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