Press Room
 
Photo: Secretary presents Gulf Coast Recovery Bond to Chairman Hal Rogers

March 29, 2006
JS-4140

Treasury Designates Series I Savings Bonds as
Gulf Coast Recovery Bonds

Treasury is designating Series I inflation-indexed savings bonds purchased through financial institutions as "Gulf Coast Recovery Bonds" to help encourage public support for the ongoing recovery and rebuilding efforts in those areas devastated by Hurricanes Katrina, Rita and Wilma.  Beginning, today, March 29, through December 2006 paper Series I saving bonds will be specially inscribed with the legend "Gulf Coast Recovery Bond."

The Gulf Opportunity Zone Act of 2005 contained a provision sponsored by Rep. Hal Rogers of Kentucky encouraging Treasury to make this designation. "We've seen an amazing outpouring of generosity from all across the nation to our fellow citizens affected by the storms," said Treasury Secretary John W. Snow. "The Gulf Coast Recovery Bond designation symbolizes the efforts of our nation's citizens and their government to rebuild communities along the Gulf coast."

Treasury's inflation-indexed I bonds are designed to offer all Americans a way to save that protects the purchasing power of their investment by assuring them a fixed rate of return above inflation for as long as 30 years.  I bonds with issue dates from November 2005 through April 2006 have a rate of 6.73% per year, compounded semiannually, for the first six months.  The rate is a combination of a 1 percent fixed rate with an annualized inflation rate of 5.70 %.  They are sold in electronic form in amounts of $25 and above or in paper form at face value in denominations of $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000, and earn interest for as long as 30 years. The special designation applies only to paper bonds.

I bond earnings are added monthly and interest is compounded semiannually. They are state and local income tax exempt, and Federal income tax on I bond earnings can be deferred until the bonds are cashed or they stop earning interest after 30 years. Investors cashing I bonds before five years are subject to a 3-month earnings penalty.

 

 

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