A new strain of tender-option bonds is geared toward taxable investors who want the advantages of Build America Bonds without committing to a long maturity.

A small number of banks have rolled out this new product in recent weeks, which is known as a taxable tender-option bond. Like their tax-exempt brethren, taxable TOBs offer short-term, puttable, floating-rate certificates created in the secondary market, but BABs serve as their collateral instead of long-term tax-exempt debt.

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