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State officials hope that Massachusetts has a new class of investors after selling $6.5 million worth of state bonds last month to individual investors.
That sum, sold in $1,000 increments, was a small percentage of the total $518 million general obligation bond offering the state kicked off May 20.
State Treasurer Steve Grossman and Gov. Deval Patrick announced the start of the bond program while at Worcester State Hospital, which is undergoing a renovation funded through bond financing.
Grossman said that he was pleased to sell more than 6,500 bonds to people who might not normally purchase state bonds because they cost too much.
The $1,000 bonds were the smallest the Bay State has offered in 21 years.
“We really want to create a whole new class of retail investors,” Grossman said. “People who may have never bought a municipal bond in their lives.”
Grossman touted the state’s bond ratings, which rank second-highest in the nation by both Moody’s Investor Services and Standard & Poor’s.
The $1,000-bonds mature in February 2014 and are expected to yield approximately 1 percent and the interest is tax-free, Grossman said.
Bonds aren’t going to make any buyers rich.
But they are seen as a slow and stable investment, said Gary Sherr, a registered investment advisor with Worcester-based Carl P. Sherr & Co.
The state advertised the BuildMass Bonds as a way to help residents finance projects in communities throughout the state and earn a bit of tax-free profit.
“They get to invest in a little bit of our future,” Grossman said.
Sherr said that some investors who cannot or do not want to pony up $5,000 or more might be interested in a smaller state bond.
“I think it’s smart to increase the investor base,” Sherr said. “I give them credit for doing that.”
Sherr said that pride in investing in one’s state might be a factor for some investors, but he said there are also other options for investors to consider, like mutual funds, even those with a $1,000 price point.
“There’s a lot of competition out there for people’s money,” he said.
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Worcester Business Journal presents a special commemorative edition celebrating the 300th anniversary of the city of Worcester. This landmark publication covers the city and region’s rich history of growth and innovation.
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