Maine bonds drawing interest Sales ‘wildly successful,’ funds to assist municipal projects

PORTLAND – Even as the municipal bond market has frozen up nationally with the upheaval on Wall Street, Mainers have been showing high interest in buying state-issued bonds.

Maine buyers last week bought $37.7 million in housing bonds from the Maine State Housing Authority, surpassing the $23 million in sales state officials were expecting. Two weeks ago, Mainers bought 93 percent of a $100 million state bond – far exceeding the usual 20 to 60 percent of local buyers.

“It was wildly successful,” MaineHousing Director Dale McCormick said of the bond, which goes toward funding the agency’s moderate-income, first-time home buyer program. “It was far beyond what we thought we would sell.”

The $100 million bond, issued by the Maine Municipal Bond Bank, will pay for more than a dozen municipal projects, from building schools to buying ambulances.

Demand for municipal bonds has been low in recent years because of their low interest rates, said Brad McCurtain, president of Maine Securities Corp., an investment firm in Portland. But as the rates have gone up, so has the interest in them.

“Given what the stock market has been doing, people have been looking for a safe place to put their money,” McCurtain said.

The MaineHousing bonds are tax-exempt and carry interest rates ranging from 3.5 percent for two-year bonds up to 6.25 percent for 15-year bonds. The $100 million bond sold for a rate just under 5.25 percent.

“We haven’t seen 6 percent on a Maine tax-exempt bond in years and years,” McCurtain said, noting that it sold out in just a few hours. “We had a lot of people calling, a lot of people who hadn’t bought bonds before.”

The upheaval in financial markets recently sent short-term interest rates soaring, prompting many municipalities and state agencies to put their planned bond sales on hold until the market stabilized.

In recent weeks, the state delayed issuing a $50 million transportation bond, the Portland International Jetport put off a $60 million expansion and the city of Lewiston delayed a $30 million bond earmarked for a new elementary school and other improvements.