November and December could be busy months for Build America Bonds, the popular 20-month old program that has funded infrastructure projects around the country.

The program, created under the 2009 American Recovery and Reinvestment Act,  is slated to expire on Dec. 31 unless Congress extends it.

The Obama administration and some in Congress have proposed to keep the bond program going beyond the end of this year. But given the possibility that Congress won't act, states and localities may head to market to take advantage of the program's low, federally subsidized interest rates.

The volume of Build America Bonds (BABs) rose to $150.2 billion as of the end of October,  the Treasury Dept. reported on Nov. 5in its latest update on the program.

October was the third-busiest month in the program's brief history, with issues totaling  $12.4 billion, a 31% jump from September's volume, according toTreasury, which has cited data from Bloomberg in its monthly reports on BABs. 

October 2009 was the top month so far, with $12.9 billion issued.

The first BABs were issued in April 2009. From that point through October, they have accounted for 21.6% of the municipal bond market.

What has attracted state and local agencies to use the new bonds is a federal subsidy that equals 35% of the interest cost that they  incur when they issue them.

Under the stimulus act, BABs are due to expire at the end of December. The Obama administration has proposed making the bond program permanent and widening their uses, but also cutting their interest subsidy to 28%.

The House last March passed a bill that would extend the bond program to April 2013, but also phase down the interest subsidy to 30% by the end of that period.

The Senate has not acted yet on an extension. But Senate Finance Committee Max Baucus (D-Mont.) in September proposed a tax package that includes a provision to extend BABs  through December 2011. The Baucus plan would trim the interest subsidy to 32% for such bonds issued in calendar 2011.

Alan B. Krueger, Treasury's assistant secretary for economic policy and chief economist, said, "In the beginning, Build America Bonds helped fill a critical hole in the municipal finance market left by the financial crisis. Now, Build America Bonds have ...become an important source of financing to help state and local governments undertake much-needed infrastructure projects."