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This Week’s Topic: Municipal Bonds

SUMMARY:

The municipal bond market is huge, encompassing hundreds of billions of dollars in outstanding debt from communities, universities, hospitals, and other “municipalities.” The interest income for most municipal bonds is free from Federal income taxes. State and alternative minimum taxes may still apply, as may capital gains tax if bonds are sold prior to maturity.

Because municipalities operate differently from corporations, the criteria is different for determining the credit-worthiness of municipal bonds. Are insured municipal bonds a safer investment? Is a General Obligation bond, whose debt obligation can be paid by raising taxes of the citizens of that municipality, worth more than other bonds with the standard ratings of A, AA, AAA?

Please note: Sharon Alister does not give tax advice. Any person considering an investment or portfolio management strategy should consult with his or her own tax advisor.

Read the FAQs on Municipal bonds, too!

Click for Municipal Bonds PDF

If your portfolio is greater than $500,000, Sharon Alister can provide a free analytic review to help ensure that your portfolio is in line with your investment goals. Call Sharon Alister at (800) 745-7110 or email info@AlisterTalksBonds.com

 

Interest Rates (Indications only)

Please note the rates for Ins’d and Pre-Res are not available from Bloomberg and will be updated as soon as possible.

Treasuries AAA Munis
3mo 1.815 N/A
6mo 2.009 N/A
1yr 2.237 1.74
2yr 2.482 1.87
5yr 2.809 2.19
10yr 2.970 2.53
30yr 3.145 3.14
today's rates chart

AAA Rated Munis

Pre-Res Ins’d Pure*
2 yr 1.91 2.05 1.87
5 yr 2.23 2.49 2.19
10 yr N/A 2.89 2.53
15 yr N/A 3.20 2.82
30 yr N/A 3.50 3.14

*Rated AAA on its own
Source: Bloomberg

This Week’s Topic: Municipal Bonds

SUMMARY:

The municipal bond market is huge, encompassing hundreds of billions of dollars in outstanding debt from communities, universities, hospitals, and other “municipalities.” The interest income for most municipal bonds is free from Federal income taxes. State and alternative minimum taxes may still apply, as may capital gains tax if bonds are sold prior to maturity.

Because municipalities operate differently from corporations, the criteria is different for determining the credit-worthiness of municipal bonds. Are insured municipal bonds a safer investment? Is a General Obligation bond, whose debt obligation can be paid by raising taxes of the citizens of that municipality, worth more than other bonds with the standard ratings of A, AA, AAA?

Please note: Sharon Alister does not give tax advice. Any person considering an investment or portfolio management strategy should consult with his or her own tax advisor.

Read the FAQs on Municipal bonds, too!

Click for Municipal Bonds PDF

If your portfolio is greater than $500,000, Sharon Alister can provide a free analytic review to help ensure that your portfolio is in line with your investment goals. Call Sharon Alister at (800) 745-7110 or email info@AlisterTalksBonds.com

 

Interest Rates (Indications only)

Please note the rates for Ins’d and Pre-Res are not available from Bloomberg and will be updated as soon as possible.

Treasuries AAA Munis
3mo 1.815 N/A
6mo 2.009 N/A
1yr 2.237 1.74
2yr 2.482 1.87
5yr 2.809 2.19
10yr 2.970 2.53
30yr 3.145 3.14
today's rates chart

AAA Rated Munis

Pre-Res Ins’d Pure*
2 yr 1.91 2.05 1.87
5 yr 2.23 2.49 2.19
10 yr N/A 2.89 2.53
15 yr N/A 3.20 2.82
30 yr N/A 3.50 3.14

*Rated AAA on its own
Source: Bloomberg

Investing involves risk, including possible loss of principal. When investing in bonds, it is important to note that as interest rates rise, bond prices will fall. Conversely, as interest rates fall, bond prices will rise.

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