Municipal bond

(redirected from Local governments)
Also found in: Dictionary, Thesaurus, Encyclopedia.
Related to Local governments: department of local government, Local authorities

Municipal bond

State or local governments offer muni bonds or municipals, as they are called, to pay for special projects such as highways or sewers. The interest that investors receive is exempt from some income taxes.

Municipal Bond

A bond issued by a local or state government. Municipal bonds are usually used to raise capital for improvements in infrastructure or other aspects of the municipality. For example, a city or school district may issue a bond to build a new school or a new playground. Municipal bonds are exempt from federal income taxes and sometimes from state and local taxes as well. Municipals usually pay lower coupons than corporate bonds, but because the yield is tax-free, the after-tax basis may be higher for a municipal bond. Risk varies with the municipality and the particular type of municipal bond. It is sometimes called a municipal improvement certificate.

municipal bond

The debt issue of a city, county, state, or other political entity. Interest paid by most municipal bonds is exempt from federal income taxes and often from state and local taxes as well. The tax exemption stems from the use to which the funds from a bond issue have been devoted. Municipal bonds with tax-exempt interest appeal mainly to investors with significant amounts of other taxable income. Also called muni, municipal, tax-exempt bond. See also Bond Buyer's Index, ex-legal, 501(c)(3) bond, general obligation bond, revenue bond, taxable municipal bond.
Case Study Municipal debt, like corporate debt, ranges in credit quality from investment-grade to very speculative. On November 9, 2001, bond trustee State Street Bank and Trust informed holders of $9.7 million of bonds issued by Marineland Foundation, a nonprofit corporation established by the city of Marineland, Florida, that they would receive $245 for each $1,000 of principal amount. Unfortunately for bondholders the debt was being repaid at slightly less than 25¢ on the dollar. The unrated Marineland bonds had been issued at yields of 8.5% in 1995 to institutional investors and remarketed in 1996 to individuals. Funds raised from the bond issue were used to purchase one of Florida's oldest tourist attractions. Opened south of St. Augustine, Florida, in 1937 as an underwater movie studio, Marineland opened to the public with dolphin and sea lion shows one year later. Attendance suffered beginning in the 1970s following the opening of Disney World, Sea World, Universal Studios, Circus World, and a host of other bigtime Florida attractions. Revenues at the refurbished oceanside aquarium proved too small to cover variable and fixed expenses, including interest on the debt. Marineland had been sold yet again at the time the agreement was reached with bondholders. The new owners intended to promote the attraction as a research resort where visitors could scuba-dive, hike, and learn about marine life.

Municipal bond (muni).

Municipal bonds are debt securities issued by state or local governments or their agencies to finance general governmental activities or special projects.

For example, a state may float a bond to fund the construction of highways or college dormitories.

The interest a muni pays is usually exempt from federal income taxes, and is also exempt from state and local income taxes if you live in the state where it was issued.

However, any capital gains you realize from selling a muni are taxable, and some muni interest may be vulnerable to the alternative minimum tax (AMT).

Munis generally pay interest at a lower rate than similarly rated corporate bonds of the same term. However, they appeal to investors in the highest tax brackets, who may benefit most from the tax-exempt income.

References in periodicals archive ?
This bill provides that members of all local governments shall be elected through secret ballot and the members of each Union Councils will be directly elected by registered voters through an election conducted by the Election Commission complying with the formalities as well as the laws for holding an election.
In accordance with requests from six organizations representing local governments and assemblies, including the associations of prefectural governors and city mayors and the associations of chairpersons of prefectural and city assemblies, the administration will submit a bill to the Diet to give legal footing to a conference at which leaders of the central and local governments will exchange views on policy matters.
Local governments would mediate between neighborhoods as needed; where they became involved in direct service provision, it would most likely involve arterial highways, water systems, sewer systems, and other services that require coordination across wide geographic areas and involve major economies of scale.
Lobbying by local governments is ``significantly bigger'' than lobbying by business, according to Haynes, and can't be blamed on Proposition 13.
While it might be reasonable to expect such combinations to occur more frequently among local governments in urban areas, cooperatives are nonetheless evident among rural counties, small towns, and smaller school districts.
34 of the Governmental Accounting Standards Board (GASB), Basic Financial Statements--and Management's Discussion and Analysis--for State and Local Governments, difficult questions have surfaced regarding the applicability of the financial reporting requirements to OCBOA financial statements.
States have political reasons for not advertising property tax incentives because those programs are generally administered at the local level and states may not want to get in the middle of competition for the new business among their own local governments.
Nondiscrimination protections--including the employer's obligation under the Americans with Disabilities Act (ADA) to provide reasonable accommodations to enable a person with a disability to perform job-related functions--do not apply to state and local governments exactly as they do for most private sector employers.
Trade Representative, eight representatives of state and local governments and eight representatives of the e-commerce industry.
com", a Web-based marketplace the two firms say will provide "significant cost savings and operating efficiencies" for state and local government organizations, institutions of higher education, and their goods and services suppliers.
The national income and product accounts (NIPA), published by the Commerce Department, provide a comprehensive summary of the receipts and expenditures of all state and local governments arid their enterprises.
Local governments in the Twin Cities metropolitan area received $197 million, 50% of the total $394 million.

Full browser ?