The Build America Bonds program is a recent variation of municipal type bonds. Under the American Recovery and Reinvestment Act of 2009, state and local governments that, in the period 2009 and 2010, could have issued municipal bonds to fund capital expenditure can instead issue Build America Bonds. If Build America Bonds are issued, the issuing authority will receive a direct federal subsidy payment equal to 35 percent of the total coupon interest paid to investors.7