July 28, 2011 05:27

Regardless of whether the federal government defaults on its debt, Louisiana bonds are safe, according to state Treasurer John Kennedy.

Thanks to the state's Bond Security and Redemption Fund, Louisiana bonds are safe, regardless of whether the U. S. Government defaults on its debt, according to state Treasurer John Kennedy.
 
"Louisiana is unique in that it is the only state in the nation with a Bond Security and Redemption Fund," Kennedy says in a press release Thursday. "It provides certainty to investors that we are serious about paying our debt and that we are true to our commitments."
 
The BSRF was originally created in statutes in Act 112 of the 1960 Legislature, and in 1975 the BSRF was granted constitutional status, according to Kennedy. The law basically says that all State Treasury receipts, minus a few statutorily mandated exceptions, must first flow into the BSRF to pay debt before anything else. 
 
"In the simplest terms, the holders of Louisiana bonds have first dibs on state revenue before any other item in state government can get paid," Kennedy adds. "The BSRF provides security to the holders of the state's full faith and credit general obligation bonds."