Idaho Bonds (Idaho Municipal Bonds)

By: EconomyWatch Content   Date: 9 November 2009

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The state of Idaho has a state level entity called the Bond Bank which collects funds at competitive interest rates by issuing Idaho bonds. The proceeds from these bond issuers are then used by the bank to lend money to local governments within the state who need funds for their infrastructure needs. The Bond Bank runs the Idaho Bond Bank program (IBBA) through which the following agencies can obtain a loan from the bank:

  • All state agencies

  • Cities

  • Towns

  • Counties

  • Public Retirement Systems

  • Regional School Districts

  • Local Public Agencies

  • Public Health Districts

  • Irrigation and Soil Conservation Districts

  • Water and Sewer Districts 

Idaho Bonds: Critical Role of Bond Bank

Idaho bonds issued by the Bond Bank are assigned better credit ratings by the ratings agencies. The underlying rating for Idaho bonds from Moody’s Rating Agency was Aa2 in 2009.

 

An attractive rating enables the bank to obtain loans at low interest rates. The Bond Bank is able to reduce interest costs by pledging certain state funds as additional security for its bonds.

 

Working of Idaho Bonds

The loans obtained by a municipality through Idaho Bond Bank are secured by:

  • The municipality's bond

  • A loan agreement with the Bank

 

When the municipalities repay the loan, the money is used by the bank to make payments to revenue bondholders.

Idaho Bonds Issued in 2009

Some of the Idaho bonds issued by the Bond Bank are:

  • Idaho Bond Bank Authority revenue bonds: These approximately $10.2 million Series 2009B bonds are fixed rate obligations that are secured by the net revenues of the water enterprise. The Bond Bank planned to use the proceeds from this offering to provide loan to the City of Twin Falls Water Enterprise. These bonds were assigned an Aa2 rating in May 2009 by Moody's Investors Service. Moody's also affirmed its Aa2 rating on the Idaho Bond Bank Authority's outstanding bonds for roughly $166.4 million.

  • Idaho Housing and Finance Association's single-family mortgage bonds: These roughly $27,000,000 2008 series C class I bonds have a variable rate. These bonds, which were not in the bank bond mode as on August 20, 2009, were assigned an AAA/F1+ rating by Fitch Ratings.

 

 





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