WASHINGTON—The Treasury Department released interim guidance yesterday instructing municipal issuers how to issue four tax-credit bonds as direct-subsidy bonds, as was authorized by a jobs law enacted in March.

The 14-page notice also makes clear that for purposes of determining issue price, issuers of the new direct-pay tax-credit bonds and Build America Bonds can rely on the tax-exempt bond rules, putting to rest some of the concern surrounding the issue. Several bond attorneys had assumed the tax-exempt bond rules should apply to BABs, but the notice marks the first explicit Treasury guidance clarifying that point.

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