Tribal Long-Term Municipal Bonds Fall


The pervasive lack of bond financing in Indian country was underlined yet again by the release of yearly figures that showed tribes going backwards in the municipal bond long-term sales category.

In 2011, tribal governments issued no long-term municipal bonds at all, according to data by Thomson Reuters. In 2010, they managed $112.3 million in two issues.

Tribes also issued no short-term bond sales in the municipal market last year, according to Thomson Reuters. That, at least, matched their 2010 performance, which was also zero.

Tribal governments issued no 2011 municipal bonds for the development, education, electric power, environmental facilities, bond insurance, general purpose or housing categories, according to Thomson Reuters tables in The Bond Buyer newspaper. The $112.3 million in 2010 came under the general purpose category.

Tribal challenges in bond finance were recently highlighted in the Treasury's report to Congress that showed while there have been attempts to prod the Indian market into life, the response has been tepid at best.

The December 2011 report by the Treasury Department noted that of a $2 billion provision for tribal tax-exempt economic development bonds, less than 3% of that amount has been issued.

Treasury ascribes this to “credit challenges facing Indian tribal governments.”

The agency was able to identify $3.7 billion in total tribal government tax-exempt bond issuance from 1987 to 2010, but noted this represented “less than one tenth of one percent” of total long-term tax-exempt municipal bonds during that timeframe.

Tribes generally do not get income from taxes, which is why they operate in the tax-exempt bond arena.

Tax-exempt municipal volume fell 7.8% nationwide during 2011, according to the Bond Buyer report.

Related: Setting the Table for Pro-Tribal Tax Policy