Advance refunding of municipal bonds threatens future value

Making the right call


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.


To continue reading...

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 indvidual account here: