Municipal Bond Market

Municipal Bond Market Overview
The municipal bond market deals in municipal bonds. In a municipal bond market the buyers purchase the municipal bonds from the issuers. The municipal bonds in the United States are provided by a variety of governmental bodies.
There are two types of municipal bond markets – the primary municipal bond market, and the secondary municipal bond market. In the municipal bond markets the investor needs to place some capital.

The bond holder gets his payments in lieu of his investments. The accumulated interest on his investment also makes up the payments.

Primary Municipal Bond Market
The holders of municipal bonds can buy them from both the primary and the secondary market. In the primary market the holders can purchase them straight from the issuer. In the primary municipal bond market, the holders can also buy municipal bonds when they are being issued.
Secondary Municipal Bond Market
The bond holders are the primary providers of municipal bonds in the secondary municipal bond market. In the secondary municipal bond market, the buyers purchase the bonds at a time after the particular bond has been issued, from other municipal bond holders.

Municipal Bond Issuers
The municipal bonds are issued in the United States by a number of governmental bodies or their representative bodies. They may be mentioned as below:
Governmental Entities
Cities
School Districts
Counties
Publicly Owned Airports and Seaports
Redevelopment Agencies

Municipal Bond Income
The holders of municipal bonds earn their income from the interest of these bonds. This income is normally exempted from the federal income taxes, and the income taxes of the respective states. However, certain municipal bonds, that are brought for special purposes, are not exempted from taxation.

Municipal Bond Repayment
The time of payment received from the varies according to the type of municipal bond. Normally, the interest from the municipal bonds are received after every six months. However the income from the short term bonds are obtained by the holder after the bond matures.

In case of the long term municipal bonds, the payments are made on the principal and on a yearly basis. Often the short and long term municipal bonds are merged into a single bond.

In such cases the payments are made by the issuer, on the interest of the bond and the amount invested. The payments are made on a yearly basis.

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Last Updated on : 10th July 2013