Frequently Asked Questions on Bonds

1. What is the rating of Maryland's General Obligation Bonds?

The State's General Obligation bonds have been assigned the highest credit rating by Moody's Investors Service, Inc. (Aaa), Standard and Poor's (AAA) and Fitch Ratings, Inc. (AAA). Currently, Maryland is one of only ten states that is rated AAA by all 3 rating agencies.

2. How can I buy Maryland bonds?

You can purchase Maryland bonds from brokers.

3. What is the dollar amount of the bonds?

The dollar amount of bonds at par is $5,000 or multiples of $5,000. If the bonds are sold at a discount or premium, the price will vary but will still be in the $5,000 range.

4. What is the duration of the bonds?

Maryland's General Obligation Bonds must mature within 15 years. However, a portion of each total bond issuance matures annually. So you can request a maturity that is appropriate for your investment portfolio from your broker.

5. What is the interest rate(s) on the bonds?

Interest rates vary depending on the term of the bond. Bonds that mature in a shorter period will generally have a lower rate of interest and bonds maturing at the end of the 15 year time period will usually have higher rates of interest. Of course, market and economic conditions greatly affect the rates. We will not know the rates on the GO bonds in our next issue until the day of the sale.

6. What other bonds does the State issue?

In addition to Maryland General Obligation bonds, agencies in the State also issue bonds. For instance, there are Consolidated Transportation Bonds and Bay Restoration Bonds. Proceeds from the Community Development Administration Bonds are used to make mortgage loans, primarily to first time home buyers. The Maryland Health and Higher Education Facilities Financing Authority (MHEFFA) uses bond proceeds to build hospitals and educational institutions. The University System issues bonds to finance higher education facilities. Finally, many local governments in Maryland also issue bonds. You should check with your broker about the rating of these bonds and about any special call provisions.

7. Is there more information available?

Look at the link for Official Statements to find out more about general obligation bonds that have been recently sold by the State. The Official Statements also include important financial and economic information about the State that was current at the time the bonds were sold. You can also call the State Treasurer's Office at 410-260-7920 with any questions.

Continuing disclosure and information on the trading activity of Maryland General Obligation Bonds are available on the website for the Municipal Securities Rulemaking Board

http://emma.msrb.org

The Municipal Securities Rulemaking Board (MSRB) also has an Education Center to help investors understand municipal bonds. The Education Center can be accessed at

http://emma.msrb.org/EducationCenter/educationCenter.aspx

 

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