Owning a piece of state utility made affordable in April

If you want to own a piece of the state-owned electric and water utility, there’s an opportunity as Santee Cooper resumes its mini-bond program in April. Another sale is scheduled for October. A minimum purchase of the utility’s capital appreciation bonds is $200 and interest is paid on the mini-bonds’ maturity date starting January 1, 2019. The current interest bearing bonds can be purchased for a minimum of $500 with interest paid semi-annually at maturity dates starting on January 1, 2013. Interest rates will be set March 31.
Nan Cline, Debt Administrator for Santee Cooper, says “Municipal bonds are historically low-risk and our bonds are rated AA. These bonds are also tax exempt from federal and South Carolina state taxes, and because of the small denominations of $500 and $200 it does make it a little easier for investors to purchase these bonds.”
The maximum combined purchase of the bonds is $50,000 per individual, per series. Santee Cooper provides power for over two million South Carolinians.
The mini-bond program held annual sales from 1988-1993 and again from 2004-2008. Cline says the response to the sales was very positive. “Our mini-bonds have been very popular starting back in 1988. Through 1988 to 1993, we had about $153 million outstanding. We started the program back again in 2004 and at this time we have about $75 million outstanding.
Cline says purchasers of the mini-bonds range from novice bond purchasers to those who regularly invest in a variety of stocks. ” We have investors who have never purchased bonds before and we are here specifically to answer questions about the mini-bonds adn how they work. We also have information on the program on our website. We also have investors who have purchased bonds before and are active in the market and are certainly familiar with what we are offering due to the fact that they can purchase the mini-bonds directly from Santee Cooper and there is not a broker involved.”
Despite the recession, the utility anticipates a bevy of activity when the sale periods begin. Cline says, “We are in a typically low rate environment right now, but we still anticipate a large interest in our bonds because they are tax free. We also have on our website a formula where you can calculate the tax free rates that we will offer and compare them to a taxable security. That will give the investor an idea of the benefits of a tax free security.”