Municipals-over-Bonds Spread

municipals-over-bonds spread

See MOB spread.

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Municipals-Over-Bonds Spread

MOB Spread. The difference in yield between tax-exempt and taxable bonds, especially tax-free municipal bonds and taxable corporate bonds. A corporate bond yields less than its stated interest rate because of taxation, whereas a tax-exempt municipal bond does not. Thus, a municipal bond paying a lower interest rate will often net the bondholder more than a corporate bond with a slightly higher interest rate, depending upon one's tax bracket. See also: After-tax basis.