The US Municipal Bond Market

Municipal bonds in the United States are securities issued by state and local governments as well as institutions created by them. Until recently the municipal bond market was viewed as being akin to the US Treasury market, ranking only slightly behind Treasuries in terms of credit quality. Although in theory this is an accurate view, investors nowadays view municipal securities as more similar to corporate bonds, with significantly higher credit risk than Treasury bonds. This is considered to be case irrespective of whether individual bonds are rated at investment-grade or not. Since municipal bonds trade at yields that are closer to corporate bonds than Treasury bonds, they are reviewed here in the section on corporate ...

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