Municipal bonds are debt obligations issued by states and local government to raise money for general purposes or to finance a specific project. Municipal bond investors receive a fixed tax-free interest payment semi-annually with the return of their principal on a specific maturity date. Unless otherwise specified, municipal bond obligations are exempt from all federal income taxes, are usually also exempt from state and local taxes in their state of issuance.

The municipal bond market is compressed of 2 closely markets; the primary market and secondary market. In the primary market dealers such as Stoever Glass buy new issues. The secondary market is made up of bonds that have been bought and resold. The secondary market is the much larger of the two. And it is where sophisticated investors shop for bargains.

Tax free muni bonds are a popular choice among investors. But tax exempt municipal bonds are more in demand than ever during unpredictable economic times. In addition to the tax-free status municipal bonds enjoy, the safety they provide is doubly in demand and during periods of increased stock market volatility.

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Taxable Municipal Bonds

A very tiny portion of municipals are taxable debt obligations. They are an outgrowth of the Tax Reform Act of 1986, which put certain restrictions on the issuance of traditionally Tax-Exempt Securities. A taxable Municipal Bond is issued as a Private Purpose Bond to finance Public Purpose projects where the 10% private use limitation has been exceeded.

Corporate bonds are debt obligations, issued by corporations. When you buy a bond, you are actually lending money to the corporation that issued it, which promises to return your principal, on a specified maturity date. Until that time, they pay you a stated rate of interest; whether monthly, quarterly or semi-annually. Of course, the income interest you receive from corporate bonds is taxable.

Corporate debt is usually traded in the over-the-counter (OTC) market. The OTC market is much larger than the exchange market and most corporate bonds transactions, even those involving listed issues, take place in the OTC market.

The corporate bond market is large and very liquid, with many billions worth of daily trading volume. The total market value of outstanding corporate bonds in the United States is approximately $2.1 trillion. Investors in corporate bonds include large financial institutions, state and local pension funds, to individuals and IRA accounts.

Ratings:

Corporate bonds are evaluated and assigned a rating based on credit history and ability to repay obligations. The higher the rating, the more secure the investment is considered. Debt obligations of Blue Chip companies are considered to be the most secure corporate investments.

Diversity:

Corporate bonds are available in a variety of sectors, structures and credit-quality characteristics to meet almost any client's investment preferences.

Liquidity:

Due to the size and liquidity of the market, investors have little trouble selling their corporate bonds in the open market. The "Trace" recording system helps ensure investors receive a fair and reasonable price.

If you are interested in Corporate Bond Offerings, email us at info@stoeverglass.com or call us at 1-800-223-3881 and ask a Stoever Glass representative to assist you.

After the financial crisis in 2008, the Federal Government came up with a program for one year where municipalities could issue taxable bonds where the Federal Government would subsidize 35% of the interest on these bonds. These bonds are known as Build America Bonds and were only issued between April 2009 and December of 2010. Essentially these bonds are the same as every other taxable municipal bond as the 35% subsidy was not allocated to the bonds.

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