Approximately $25 million in State of Vermont Citizen Bonds will be offered for sale on March 5. This offering is part of a larger bond sale that was scheduled for last October, but postponed shortly after Tropical Storm Irene caused widespread destruction in the state. The opportunity to purchase the general obligation bonds will be made available first to Vermont residents and businesses. Previous Vermont Citizen Bond offerings have sold out in a matter of hours.
‘After Irene, it made sense to postpone the bond sale so that the State could more thoroughly assess the impacts and costs related to the storm damage,’ said State Treasurer Beth Pearce. ‘Since then, the municipal bond interest rates have fallen and we expect to lock in some of the lowest borrowing costs in Vermont’s history.’
Bonds may be purchased in $1,000 increments and must be bought through a registered broker/dealer. The bonds’ maturities will range from one to 10 years. The State Treasurer’s Office does not sell the bonds directly and does not endorse any particular broker/dealer. Any bonds remaining after Vermonters have had the opportunity to invest will then be made available to retail and institutional investors from outside of the state.
‘Based on the strong response to bond offerings in prior years, I would urge anyone interested in purchasing these bonds to contact a registered broker/dealer right away,’ said State Treasurer Beth Pearce. ‘Interest earnings from the bonds are exempt from State and federal taxes. As a new bond issue, these bonds are sold without commission or trading mark-up.’
The money raised by Vermont’s bond sales finances school construction, major maintenance and construction at UVM and the Vermont State Colleges, pollution control, safe drinking water, public safety, affordable housing, maintenance of State buildings, and a wide range of other projects. Vermont bonds are rated as triple-A by Moody’s Investor Service and Fitch Ratings, the highest rating available to government issuers. Vermont bonds also are rated AA+ by Standard & Poor’s Ratings Service, the second-highest rating. The higher the bond rating, the more creditworthy the rating agency evaluates a bond issuer to be.
In addition to the Vermont Citizen Bonds, on March 5 the State Treasurer’s Office also plans to make available up to $60 million in negotiated general obligation refunding bonds. The amount of refunding bonds, if any, will depend upon the level of interest rates at the time of the sale. Lower interest rates will mean that more bonds can be refinanced for savings.
‘The process of issuing refunding bonds is similar in concept to a homeowner refinancing a home to take advantage of lower interest rates,’ explained Pearce. ‘Fortunately for Vermont’s taxpayers, we are entering the market at a time when interest rates are the lowest they have been in more than 60 years. As such, we hope to save a considerable amount of taxpayer money by reducing our future debt payments.’
The week of February 27, the Preliminary Official Statement for this offering will be available on the State Treasurer’s web site at www.buybonds.vermont.gov. The offering is named: State of Vermont General Obligation Bonds, 2012 Series A (Vermont Citizen Bonds) and General Obligation Refunding Bonds, 2012 Series D.
Investors interested in the Vermont Citizen’s Bonds should contact their registered broker/dealer. Citi will serve as senior managing underwriter, BofA Merrill Lynch and Wells Fargo will be co-managers, and 10 additional firms ‘ Barclays, Edward Jones, Fidelity, J.P. Morgan, Morgan Keegan, MR Beal, Raymond James, RBC Capital, Rockfleet and TD Bank ‘ will participate in the selling group.
Under no circumstances should this announcement of bond issuance be considered an offer to sell or a solicitation to offer to buy, nor shall there be any sales of the bonds in any jurisdiction in which such offer, solicitation, or sales would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The bonds will be offered for sale by means of an Official Statement.
Vermont State Treasurer 2.7.2012