Advance refunding of municipal bonds threatens future value

The tendency among municipal issuers to call their bonds early in the belief they are refunding on better terms often results in the loss of future value, to the detriment of the taxpayer.


Municipal bonds make up a sizeable portion of the US fixed income market, with around 50,000 issuers accounting for close to $3 trillion of outstanding debt. Unlike the corporate bond market, where the call option is approaching extinction, most long duration tax-exempt municipal bonds are callable after 10 years. The call option allows issuers to take advantage of declining interest rates by issuing new bonds at lower yields and paying off the outstanding bonds at the call price.


Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to View our subscription options

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here