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.
- 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.
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