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The interest rates of Texas municipal bonds have historically moved inline with the inflation rate. Although bonds offer low yields, a municipal bond offers stable and guaranteed returns. If you are an investor who does not want to take much risk, you can opt for Texas bonds. When purchasing Texas municipal bonds, it is advisable to opt for one with an AAA rating.[br]
Bonds TX – Texas Permanent School Fund
The Texas Legislature created the Texas Permanent School Fund (PSF) in 1894 to support and manage public free schools efficiently. In January 2009, Fitch Ratings affirms its ‘AAA’ rating on PSF’s school bond guaranty program. The rating agency believed that the outlook was stable. The rating reflects that the PSF has the liquidity to cover any unforeseen defaults by school districts on guaranteed general obligation (GO) bonds. Moreover, the rating reflects the low credit risk of the various participating districts.
The PSF is an endowment fund having a long term investment horizon. The State Board of Education (SBOE) manages the PSF with the following aims:
Managing the growth of PSF’s corpus
Protecting the capital
Balancing the needs of the present and future generations of school children in Texas.
As of February 2009, the total value of PSF bonds deteriorated to $18 billion from $25 billion in October 2008 due primarily to the credit crisis.
PSF-Backed Bonds TX
With PSF funds reaching their full capacity, the Tyler Independent School District ventured into the Muni market with the backing of PSF. The East Texas district has issued Muni bonds worth $125 million of school-building bonds. The fund finances the construction of five elementary schools in the district. The maturity period of these serial bonds range from 2009 to 2034. The demand for PSF-backed bonds was fostered by many of the mono-line bond issuers being mired in the 2008 credit crisis.[br]
Like any other bond, Texas bonds offer modest interest income with higher security than other investment vehicles such as stocks, commodities and forex. It is better to diversity your portfolio so that you get stable income with modest risks. If you have decided to opt for Texas bonds, you may consult a financial advisor who will help you meet your investment objectives.