Municipal bonds come in several shapes and sizes, with a variety of tax structures, funding sources and methods of analyses.
Types of municipal debt include:
- General obligation bonds,
- Revenue bonds, which may focus on specific areas such as
- Education, and
- Transportation – as well as
- Issuance subject to the Alternative Minimum Tax (AMT),
- Build America Bonds (BABs),
- Double-barreled bonds, and
- Advance refunding bonds, to name just a few.
But what differentiates these bonds from one another, and what are some of the ways in which investors can conduct analyses on some of these instruments in both the primary and secondary markets?
This is because payments to holders of revenue bonds are not sourced from taxes the way general obligation bonds are. For revenue bonds, cash flows from constructed projects are typically used to repay investors.
In this course, we’ll cover factors such as these, as well as many others.
To navigate these oftentimes complex products, we’ll also provide you with some tools so that you may be able to become more familiar with the types of municipal notes available to purchase and trade, as well as obtain a better understanding of the features associated with municipal debt in terms of:
- Due diligence,
- Calculating accrued interest
- Yield disclosure, and
- Tax considerations, including
- Recent changes to state and local tax, or SALT, deductions
We’ll also walk you through the IBKR Trader Workstation, where you can locate certain municipal bonds in the secondary market and conduct due diligence to help inform your investment decisions.
In the next chapters of this video series, we’ll explore more about general obligation bonds and revenue bonds, and as you progress through the course, you may wish to revisit previous lessons to enhance your understanding of the many facets that comprise the municipal bond market.
You’ll also find a quiz at the end of each lesson, along with a final exam at the end of the course, to reinforce your understanding.
Please keep in mind that as you review this course that this material does not, and is not, intended to take into account your particular investment needs. Before acting on this material, you should consider whether it is suitable for your financial conditions, investment objectives or other requirements.
The information in this presentation is provided for informational purposes and should not be relied on for tax, legal or accounting advice. Before engaging in any transaction, you should consult your own tax, legal and accounting advisors.
Disclosure: Interactive Brokers
The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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Disclosure: Tax-Related Circular 230 Notice
The information in this presentation is provided for informational purposes only, and does not constitute tax advice and cannot be used by the recipient or any other taxpayer to avoid penalties under any federal, state, local or other tax statutes or regulations, or to resolve any tax issue.