Taxable Municipal Bond issuance soars in 2020



Many investors automatically think of tax free income when they hear municipal bonds. 2020 has seen a surge in the issuance of the lesser known Taxable Municipal Bonds.
 
Taxable Municipal Bonds are a terrific option for domestic investors seeking complements to a corporate bond portfolio and is also attractive to for domestic investors seeking individual bonds in their tax-deferred IRA or ROTH IRA.
 
In addition, more foreign buyers and institutions are investing in domestic Taxable Municipal Bonds to take advantage of the higher interest rates. There is approximately $18 Trillion of global and sovereign debt yielding below zero, in order words, a foreign investor is paying the government to safe guard their capital.
For example,
  • 10yr German Bund is yielding -0.547%. 
  • 10yr Spain Bond is yielding      0.085% 
  • 10yr Taxable Municipal Bond   1.93% (A-Rated)
 
This blog from the esteemed Brookings Institute takes the reader into a deep dive on taxable municipal bonds and why issuance has surged in 2020. 
 
 https://www.brookings.edu/blog/up-front/2020/12/21/why-the-surge-in-taxable-municipal-bonds/
 
please contact jeff@watkinsoncap.com if you have more questions. 


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