How do I purchase VMBB Bonds?

Step 1 - Learn about the Bonds

Read the Preliminary Official Statement (POS) available from this web site or from the participating brokers to learn more about the bonds, including their security, maturity dates, credit ratings, the types of projects they finance and other information that you may find important to help you make an informed investment decision. This website is not an offer to sell any bonds.

Step 2 - Open a brokerage account

You must have an account with one of the brokerage firms participating in the bond sale, or with another firm that can place an order through a brokerage firm participating in the bond sale. Please check to determine if your broker can place an order through the participating brokers. (If you have a brokerage account, go to Step 3.) If you do not have an account, you may open one and purchase bonds during the Retail Sale Order Period. A list of brokers participating in the sale can be found on the left side of this page.

Investors are encouraged to begin the New Account process well in advance of the sale date. Depending on the brokerage firm, internal new account procedures may take some time to process.

Step 3 - Place your order

Contact the broker with whom you have an account, either online or by phone, to get more information about how to buy bonds during the Retail Sales period. Discuss with the broker the number of bonds, the maturity date and the price at which you are willing to purchase the bonds, as well as any questions you may have from examining the Preliminary Official Statement (POS).

Does the State of Vermont Provide Support for the VMBB?

The VMBB’s authorizing statutes can be found at – http://www.leg.state.vt.us/statutes/fullchapter.cfm?Title=24&Chapter=119.

The State of Vermont has NOT pledged its full faith and credit to the repayment of VMBB bonds – http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=24&Chapter=119&Section=04621.

The State has provided the VMBB with its Moral Obligation. Should the VMBB ever need to draw on its Debt Service Reserve Fund, the State is morally obligated but not required to appropriate funds to cover the draw. The VMBB’s Moral Obligation statute can be found at – http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=24&Chapter=119&Section=04675.

Should a borrower default on a loan payment to the VMBB, the State Treasurer is authorized to intercept any funds due that borrower by the State and transmit them to the VMBB until the amounts transmitted equal the default amount – http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=24&Chapter=119&Section=04555.

Vermont Statutes do not afford Vermont’s municipalities the ability to declare bankruptcy and avoid debt repayment.

Does VMBB have Credit Enhancements?

The VMBB uses a variety of means and tools to enhance the credit of its bond issues. Besides the interest and principal payments made by each borrower, VMBB has two immediate available sources of funds to meet a debt service funding shortfall.

  1. The VMBB has a special bond reserve fund. By Statute, funds are deposited into a Debt Service Reserve Fund to be used to cure any late or missed payments – http://www.leg.state.vt.us/statutes/fullsection.cfm?Title=24&Chapter=119&Section=04671.
  2. The VMBB’s General Operating reserve fund may also be used to cure any borrower late payments.

The VMBB has never had a late payment that required the use of the Debt Service Reserve Fund or the General Operating Reserve Fund to cure the late payment.

In addition to the credit enhancement provided by reserve funds, the VMBB minimizes investor risk by requiring borrowers to make accelerated principal repayments through annual principal payments in equal or declining amounts. Excepting for the few revenue loans outstanding in the VMBB’s loan portfolio, borrowers may not use mortgage-style amortization schedules.

By policy, the VMBB only issues fixed-rate debt. It does not issue variable rate debt, auction rate securities, or enter into interest rate swap agreements.