Everything You Need to Know About State Bonds

State bonds can be a bit confusing, but don't worry, I've got you covered.

State bonds are issued by states to raise funds for various projects, such as infrastructure development, education, and healthcare. They're a type of municipal bond.

One key benefit of state bonds is that they're often backed by the state's credit rating, which can be higher than that of individual companies. This makes them a relatively low-risk investment.

Investing in state bonds can provide a steady income stream through regular interest payments.

There are two main types of bonds issued by the state: General Obligation Bonds and Water & Sewer Revenue Bonds.

The state issued $27,450,000 in General Obligation Bonds, which will be repaid through property taxes.

These bonds fund various projects, including one worth $27,450,000.

Water & Sewer Revenue Bonds, on the other hand, are repaid through utility revenues, and were issued in the amount of $67,744,743.

Here's a breakdown of the two types of bonds:

Government bonds are a type of investment that's issued by the U.S. federal government to finance its activities. Treasury bonds, also known as long bonds, have the longest maturity at 20 or 30 years and have a coupon payment every six months.

The U.S. government suspended issuing 30-year Treasury bonds for four years from 2002 to 2006, but they were re-introduced in 2006 due to demand from pension funds and large institutional investors.

Treasury notes, on the other hand, have maturities of 2, 3, 5, 7, or 10 years and have a coupon payment every six months. They're sold in increments of $100 and are widely followed by investors and the public.

Here are some key features of Treasury notes:

U.S. savings bonds are another type of government bond that's not marketable and can only be redeemed by the original purchaser or beneficiary. They're offered in two forms: Series EE and Series I bonds.

Treasury bills are zero-coupon bonds that mature in one year or less, bought at a discount of the par value and redeemed at that par value to create a positive yield to maturity.

The minimum purchase for T-bills is $100, a change made in April 2008 to make them more accessible to individual investors.

Banks and financial institutions, especially primary dealers, are the largest purchasers of T-bills, taking advantage of their low risk and liquidity.

T-bills are identified with a unique CUSIP number, and re-openings of existing bills share the same number. For example, the 26-week bill issued on March 22, 2007, has the same CUSIP number as the 13-week bill issued on June 21, 2007, and the 4-week bill issued on August 23, 2007.

Regular T-bills are commonly issued with maturity dates of 4, 8, 13, 17, 26, and 52 weeks, and are sold through single-price auctions held weekly.

Treasury notes have maturities of 2, 3, 5, 7, or 10 years.

They have a coupon payment every six months and are sold in increments of $100.

T-note prices are quoted on the secondary market as a percentage of the par value in thirty-seconds of a dollar.

Ordinary Treasury notes pay a fixed interest rate that is set at auction.

Current yields on the 10-year Treasury note are widely followed by investors and the public to monitor the performance of the U.S. government bond market and as a proxy for investor expectations of longer-term macroeconomic conditions.

Holders of floating rate notes are paid the par value of the note when it matures at the end of the two-year term.

Floating rate notes pay interest quarterly based on rates set in periodic auctions of 13-week Treasury bills.

Treasury bonds, also known as T-bonds, have the longest maturity at twenty or thirty years.

They have a coupon payment every six months, like T-notes. The U.S. federal government suspended issuing 30-year Treasury bonds from February 18, 2002, to February 9, 2006.

The 10-year Treasury note became the general, most-followed metric of the U.S. bond market during this time. However, due to demand from pension funds and large, long-term institutional investors, the 30-year Treasury bond was re-introduced in February 2006.

It is now issued quarterly. In 2019, Treasury Secretary Steven Mnuchin suggested considering the issuance of 50-year and even 100-year Treasury bonds, but this did not materialize.

Here's a brief overview of the different types of Treasury bonds mentioned:

Municipal bonds are a type of bond issued by state and local governments to finance public projects. They often exempt shareholders from federal income tax, and frequently have long tenures.

Municipal bonds can be used for a variety of purposes, including capital expenditures for public and economic development projects. Local governments may use them to fund energy efficiency retrofits or improvements to existing buildings.

Some examples of municipal bonds include:

These bonds can be issued by local governments, local and regional authorities, state authorities, or third-party and nonprofit organizations. They can be used to finance a wide range of projects, from public facilities to energy efficiency retrofits.

Municipal bonds often exempt shareholders from gross income for federal income tax purposes. They frequently have long tenures, which can be beneficial for investors looking for a steady return.

Municipal bonds often have low, fixed rates, making them an attractive option for those seeking predictable income. This is especially true for investors who are sensitive to market fluctuations.

The proceeds from municipal bonds are frequently used by state or local governments or conduit borrowers for capital expenditures on public and economic development projects. This can include funding for roads, parks, equipment, and bridges.

Here are some common types of municipal bonds:

Municipal bonds can be issued by various entities, including local governments, local and regional authorities, state authorities, and third-party and nonprofit organizations.

Certificates of Obligation (CO's) are a type of municipal bond that doesn't require voter approval before they're issued. They're guaranteed by the City's taxation power and count towards the tax rate needed to support debt payments.

Before CO's can be issued, the City Council must approve a resolution stating their intent to do so. This resolution is a crucial step in the process.

A notice must be published in the newspaper at least 45 days prior to the sale date, providing details such as the maximum amount to be issued, how the proceeds will be used, and the date and time of the planned sale. This transparency is essential for keeping citizens informed.

The notice also includes information about the City's currently outstanding debt obligations. This transparency helps citizens understand the City's financial situation.

Reaching underserved communities is crucial when developing a financing program, and considering their needs early on can help create a comprehensive program that incorporates consumer protections. Decisionmakers can evaluate how marginalized communities have been included in the policymaking process by asking a few key questions.

These questions include: Have marginalized communities participated meaningfully in the policymaking process? Does the policy help address the impacts of inequality or inequity, or does it widen existing disparities?

Barriers to more equitable outcomes include lack of access to information, limited financial resources, and systemic injustices. These barriers can prevent marginalized communities from benefiting from financing programs.

To address these concerns, decisionmakers can implement consumer protection frameworks, such as increasing awareness, analyzing the applicant's ability to pay, and requiring disclosure of financing costs. These frameworks can help ensure that financing programs are accessible and beneficial to marginalized communities.

Municipal bonds, in particular, can provide benefits to underserved communities by lowering upfront costs and making energy efficiency and renewable energy systems more accessible. This can be especially helpful for low-income (LMI) community participation.

Here are some key considerations for consumer protections in financing programs:

By considering the needs of underserved communities and implementing consumer protection frameworks, decisionmakers can create financing programs that are equitable and beneficial to all.