Vermont Bonds (Vermont Municipal Bonds)

By: EconomyWatch Content   Date: 2 November 2009

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Vermont state government and development agencies issue bonds through the Vermont Municipal Bond Bank (VMBB) to larger markets. These Vermont bonds are then typically acquired by high net worth individuals (HNIs) and institutional investors from these markets as a relatively secure investment option.

Why Choose Vermont Bonds

Tax-free Vermont municipal bonds are quite safe because they are backed by the full faith and credit or highest obligation of cities and towns. Vermont bonds allow people staying in Vermont and other US states to:

  • Invest with an aim of receiving monetary returns, while participating in the development of their state and communities.

  • Eliminate the charges associated with a middleman for marketing the bonds.

  • Provide an alternative to current low-yield consumer savings instruments.

Vermont Bonds: Vermont Municipal Bond Bank

VMBB provides municipalities in Vermont access to capital markets at the lowest possible costs. It also helps the municipalities to fulfill their needs for improvements and encourages continued investor interest in the purchase of the bonds.

It offers the following Vermont municipal bonds:

  • General Obligation or Non-Revenue bonds. The interest on these bonds is paid by general municipal taxes. These bonds are issued with the loan term of five to 20 years. Some examples of general obligation bond are:

    • Water supply systems

    • Purchase of land

    • Purchase of equipment

    • New construction and renovation of town or school buildings

    • Infrastructure installation and repairs

    • Wastewater systems

  • Revenue bonds: The interest on these bonds is paid by fees collected by the issuing firm. The loan term of these bonds is five to 30 years. Bonds issued to meet the financial needs of Electrical generation systems are an example of such bonds.

Popular Vermont Bonds

Some of the widely accepted Vermont bonds are:

  • Vermont Municipal Bond Bank (VMBB) 2009 series 1 bonds: These bonds were assigned 'AAA' rating by the Fitch Ratings agency in July 2009. In addition, Fitch affirms the 'AAA' rating on VMBB's $488 million outstanding 1988 general bond resolution bonds.

  • Vermont Municipal Bond Bank (VMBB) 2009 series 2 refunding bonds: Issued under VMBB’s 1988 general bond resolution, these bonds were assigned 'AAA' rating by Fitch Ratings in July 2009.

VMBB lends the proceeds from these bonds to 22 local governmental entities for various capital improvements. It also refunds certain outstanding obligations for debt service savings.


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