Oregon municipal bonds can be short or long term investments which are the loans that are provided to the state of Oregon in order to finance the projects such as improvement of roads, schools, universities, energy transmission lines etc. They are a secure alternative to investment and offer good returns to the bond holder. The interest paid on Oregon municipal bonds are free from the state of Oregon tax. The state of Oregon gives out two types of bonds in order to finance its project namely General obligation bond, Certificate of participation bonds and revenue bonds.
The general obligation bonds are completely supported by the state of Oregon. These bonds are used for funding various tasks such as constructing university and college infrastructure, veteran mortgages, small scale energy products etc. These bonds are well secured by the issuers promise to pay the semiannual interest to the bond holder. The projects that are funded by these bonds benefit the whole community.
Certificate of participation bonds on the other hand are not backed by the full faith of the state of Oregon. They are free from state and federal taxes. They enable the government to finance the project without issuing a long term debt. They are generally not used for the road projects. They are sometimes used by the municipalities for the purpose of paying for the vehicles, buildings, parks or even jails. The repayment of the certificate of participation bonds involves the annual appropriation that is provided by the Oregon legislature.
Revenue bonds can be borrowed by the state agencies in order to finance the self supporting programs or projects which may include constructing highways, building bridges and roads. These bonds are not backed by the full credit and faith of the state of Oregon. The revenue that is created from the projects is used to pay the principle and interest of the bond.
The Oregon municipal bonds are supported by the MDAC i.e Municipal Debt Advisory Commission. It is the commission that provides technical support to the state and local agencies in order to improve the Oregon bond market. There are various activities that are undertaken by the MDAC such as:
- Setting up agreements in order to exchange the interest rates.
- Supplying the Oregon municipal bond calendar. This calendar consists of a schedule of the forthcoming state and local details regarding the sales.
- Generating the Oregon municipal bond index. This comprises of the interest rates of the Oregon municipal bond.
- Presenting the manual of Oregon municipal bond which is a handbook that contains the various rules and laws of the bonds.
The Oregon municipal bonds are exempt from taxes which means that the interest that is generated is exempt from the Oregon personal income tax. The Oregon municipal bonds that are exempt from the federal tax are actually referred to as taxable bonds in the official documents.