Connecticut Bonds (Connecticut Municipal Bonds)
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- The state’s need to issue deficit bonds to resolve this year’s budget shortfall.
On October 26, 2009, the bond rating agency, Moody’s Investors Service reduced its outlook for Connecticut’s general obligation (GO) bonds from stable to negative. Meanwhile, the agency retained its rating of Aa3 for roughly $12 billion of the state’s outstanding GO bonds.[br]
Some of the reasons for the downgrade in rating for Connecticut bonds were:
- The state’s need to issue deficit bonds to resolve this year’s budget shortfall.
- The use of deficit financing to close revenue gaps in the state’s biennial budget for the year, 2010 – 2011.
- The use of one-time solutions to close more than half of the shortfall in the biennial budget. These solutions may create structural gaps in the budget in future. It will also reduce the state’s flexibility to address additional pressures arising from delayed and/or weaker-than-expected recovery from the financial crisis of 2008.
Connecticut Bonds: Considerations
Some of the considerations that every investor must mull over before buying Connecticut bonds are:
- Read the related Preliminary and final Official Statements. These contain comprehensive information about the bonds.
- Possess a brokerage account with the participating broker. They must also be prepared with minimum investment required for each type of bond (stated in the Preliminary Official Statement).
- The tax-exempt bonds are not subject to federal, personal income taxes and Connecticut state personal income taxes.
- Before deciding to purchase any bond, consult the tax advisors to determine the applicable federal, state and local tax consequences of owning Connecticut bonds.
As of November 2009, Connecticut had scheduled for bond sale on November 6, 9 and 10.[br]
Some Connecticut Bonds
Some of the recently issued Connecticut Bonds are:
State of Connecticut special tax obligation (STO) bonds, transportation infrastructure purposes: These bonds were secured by the pledged revenues from taxes and fees on:
- motor vehicle fuel
- sales of used vehicles
- licenses
- a fixed portion of taxes on the gross earnings of oil companies.
These STO bonds were assigned an ‘AA-‘ rating by Fitch Ratings in October 2009.
Town Of North Branford, Connecticut general obligation bonds, Issue of 2009: Designated as qualified tax exempt obligations, the bond was scheduled for sale on November 1, 2009.
The interest on these bonds will be paid on November 1, 2010, and thereafter, twice a year on May 1 and November 1 until maturity.
