Patriotism sells bonds, but safe yield helps as well
By Simon Kennedy
Bloomberg News Service
WASHINGTON — Sales of U.S. savings bonds surged 36 percent since they were renamed "Patriot Bonds" in the aftermath of the 9/11 terrorist attacks, the Treasury Department said.
The government renamed its Series EE savings bond in December. Sales of the bond between Dec. 1 and Aug. 1 totaled $1.57 billion, $419 million higher than in the corresponding period the previous year, said Bureau of the Public Debt spokesman Peter Hollenbach.
While legislators linked the increase to heightened patriotism in response to the worst terrorist attacks in U.S. history, some analysts said the bond's yield, now 3.96 percent, have made them attractive investments in their own right at a time when stocks have fallen.
"I'm sure some people bought them for patriotism, but sales also likely went up because alternatives such as bank accounts or the stock market haven't proved as attractive," said Stephen Stanley, an economist at Greenwich Capital Markets.
The Standard & Poor's 500 index dropped 22 percent in the same period. The average yield on a one-year certificate of deposit over that time was 2.4 percent, according to Bloomberg Analytics.
Treasury officials had played down the idea of special bonds, contending that the country would be better served if the money used to buy bonds were spent on goods or donated to charity.
They renamed the securities on Dec. 11, 2001. While money raised by the sales isn't earmarked for a specific purpose, Treasury has said the money will contribute to the government's effort to battle terrorism by raising national savings.
The Treasury began issuing Series E savings bonds in May 1941. After Japan's attack on Pearl Harbor the following December, they were renamed "War Bonds," and helped raise $38 billion for the war effort. The securities reverted to the Series E designation once World War II ended and were replaced with the Series EE on June 30, 1980.
Patriot Bonds sell at half face value and are available in denominations from $50 to $10,000.
