Municipal market dynamics are so favorable right now that investors involved in tender-option bond programs can create better revenue streams compared to what they received before the financial crisis, but at half the risk or less.

But  the programs, which suffered losses and contracted dramatically during the credit crisis, have not yet taken flight now that the market has recovered. The success of taxable Build America Bonds — which has limited the supply of tax-exempt debt necessary for TOB programs — is one reason. Another is demand: the program uses leverage, and investors don’t have much appetite for risk these days.

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