PowerShares has filed with the Securities and Exchange Commission (SEC) to add yet another Build America Bond exchange traded fund (ETF) to its popular existing one.

PowerShares’ new ETF will be the PowerShares Intermediate Build America Bond (NYSEArca: BABI). The benchmark index will hold securities with between one and 12 years until maturity. [PowerShares Takes on the Bond Barket.]

ETF Daily News explains that the bonds are taxable municipal bonds that carry special tax credits and federal subsidies for either the bond issuer or the bondholder. Build America Bonds were created under the American Recovery and Reinvestment Act that U.S. President Barack Obama signed into law in early 2009. [Another Entrant Into the Bond Market.]

Issuance of Build America Bonds will cease on Dec. 31, 2010 unless the relevant provisions of the Act are extended. Unlike most other municipal obligations, interest received on Build America Bonds is subject to federal and state income tax.

There are two Build America Bond ETFs trading right now: PowerShares Build America Bond (NYSEArca: BAB), which launched in November and already has $350 million in assets, and SPDR Nuveen Barclays Capital Build America Bond (NYSEArca: BABS), which launched last month.

For more stories about new ETFs, visit our New ETFs category.

Tisha Guerrero contributed to this article.

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