From the course: Understanding Capital Markets

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Municipal bond markets

Municipal bond markets

From the course: Understanding Capital Markets

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Municipal bond markets

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- [Narrator] For investors in the highest income tax brackets, the best choice of bonds is often municipal bonds. Municipal, or muni bonds, are bonds issued by state and local governments, and by other types of non-profit entities like universities. There are basically two types of municipal bonds: tax-backed bonds and revenue bonds. Tax-backed bonds are frequently called GO bonds, or general obligation bonds, and these are dead obligations that are issued by states, counties, cities, towns, school districts, et cetera. They're backed by some form of tax revenue. It's a bond that is a general obligation of the municipality. It's backed by the full faith and credit of that municipality. Revenue bonds are issued for special projects, like building, say, a new water treatment facility, or building a new toll road. The bondholder gets paid back from the revenues generated by that project, in this case the water treatment…

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