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Tags: Municipal Bonds
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Potential investors in municipal bonds may have many questions when … About a Municipal Bond? Before investing in a municipal bond, an …
SEVEN QUESTIONS TO ASK WHEN INVESTING IN MUNICIPAL BONDS
Potential investors in municipal bonds may have many questions when considering the purchase of a municipal security. The following information can serve as a starting point for an investor’s discussion with a financial professional about investing in municipal securities.
What Should I Know About Credit Quality?
Before investing in a municipal bond, an investor should carefully review the information available about the bond. Key sources of information, all of which are available on the MSRB’s EMMA website at emma.msrb.org, include: Official Statements Disclosures made available by issuers that contain terms of a bond and other details such as credit ratings and financial information about the bond’s issuer. When bond proceeds are used to make loans to other parties (such as hospitals or universities), the bond issues are generally secured by the loan payments, and the official statements contain financial disclosure about the borrowers (sometimes referred to as “obligated parties”). Continuing Disclosures Ongoing disclosures released throughout the life of a bond that may provide routine information such as the issuer’s or obligated party’s annual financial statements, as well as changes in financial conditions and other events that could affect the value of a bond, such as credit rating changes. Trade Data Trade data can provide a valuable basis for evaluating the price of a bond investment. Financial professionals are required, under MSRB rules, to disclose any information available from established industry sources that may be material to an investment. Investors should ask their financial professional whether they are being provided with the full range of information they are entitled to receive and any additional information that they should consider when making an investment in a municipal security.