RALEIGH, N.C. — Starting immediately, Local Government Federal Credit Union said it is in the market to purchase municipal bonds from North Carolina cities, towns and counties and has earmarked $50 million to make it happen.
The $823 million credit union said it seeks to accomplish two purposes: invest in "ultra-sound" instruments that will complement its balance sheet and encourage other institutional investors to return to North Carolina municipal bonds. Sold by cities, towns, counties and other governmental units as a way to raise money for public projects, municipal bonds also fund schools, courthouses, water and sewer infrastructure and roads.
The downside is during a recession, there is less money to go around, said LGFCU. To compound matters, tax receipts, the main source of government revenue, may be strained.
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"Financial leadership will help keep North Carolina ahead of the economic crisis," said Maurice Smith, president of LGFCU. "For institutions that do business in North Carolina, we have an obligation to support our communities by showing diligent faith in our neighbors. North Carolina local governments have merited our confidence in their wherewithal to manage risk and attend to the needs of our citizens. Moreover, investing locally has its appeal for us."
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