How to Buy Vermont Tax Exempt Bonds
The State does not sell bonds directly. You must buy these bonds through a registered broker/dealer. These bonds may be either newly issued or they may be offered on the secondary market (i.e., bonds that were previously issued that are put up for sale by the owner). The State issues general obligation bonds through either a competitive sale or a negotiated offering. In a competitive sale, the Treasurer's Office accepts bids from municipal underwriting firms to buy the bonds. The underwriting firms, following the purchase, sell the bonds to individual and institutional investors. In a negotiated offering, the Treasurer's Office negotiates terms with an underwriter that is pre-selected in a competitive request for proposal process.
Locating a Registered Broker/Dealer
Vermonters should always "Ask & Check" to verify the registration (license) status of the individuals and companies offering them investment opportunities before actually investing. This can be done on the web site of the Financial Industry Regulatory Authority (FINRA), a non-governmental regulatory body, using their BrokerCheck system.
Vermont's Department of Financial Regulation (formerly known as BISHCA) regulates the activities of the financial services industry in Vermont. The department's Securities Division is tasked with the regulation of those offering and selling securities to Vermonters. You may call the Securities Division to discuss any questions or concerns you may have. Dial toll-free in Vermont 1 (877) 550-3907 or (802) 828-3420.
New Issue and Secondary Bonds
New issue bonds are sold without commission or trading mark-up. They will be most readily available from the firm that is acting as lead manager for a bond issue, or from a firm that is designated as a "selling group" member. Depending upon demand for a new issue, availability of bonds can be limited, especially for more popular maturities. Most bonds are issued in denominations of $5,000. Each year the State Treasurer's Office issues special "citizen bonds," available only to Vermont residents, in denominations as low as $1,000.
Secondary, or seasoned, bonds may be available from these same dealers. Bonds purchased in the secondary market are subject to both commissions and dealer mark-ups (i.e., there is a spread between the bid price that the dealer will pay for a bond, and the ask price that a dealer receives for offering a bond).
The State Treasurer's Office does not endorse any particular broker/dealer. If you are interested in obtaining information concerning prospective broker/dealers, we recommend you visit the web site for the Securities Division, Department of Financial Regulation, or call 802-828-3420.
Treasurer's Office Upcoming and Recent Bond Issues
In addition, these other state agencies and authorities issue bonds.
- Vermont Educational and Health Buildings Financing Agency (VEHBFA)
- Vermont Municipal Bond Bank (VMBB)
- Vermont Housing Finance Agency (VHFA)
- Vermont Economic Development Authority (VEDA)
- Vermont Student Assistance Corporation (VSAC)
As with any investment, state, municipal, agency and other tax- exempt debt instruments are not without risks to the investor. These risks include credit, interest rate, market, tax, and other risks that may include loss of the entire amount invested. While many tax-exempt issues offer above-average credit quality, investors are urged to consult with their financial and tax advisors prior to purchasing Vermont tax-exempt debt instruments or any investment security.