Investing municipal bonds backed by sales tax revenues in major

Investing municipal bonds backed by sales tax revenues in major metros exhibit strong debt service coverage ratios above 2.5x, which analysts cite as a key factor in maintaining AAA credit outlooks. Here's the problem: the bond market has been wrong countless times. Investors panic, pile into bonds, and pundits declare doom. Yet the dire forecasts often don't materialize. Meanwhile, people who listened to the fear sold perfectly good stocks and missed major gains. Municipal securities are subject to credit/default risk and interest rate risk and may be more sensitive to adverse economic, business, political, environmental, or other developments if it invests a substantial portion of its assets in the bonds of similar projects or in particular types of municipal securities. While interest earned on municipal securities is generally not subject to federal tax, any interest earned on taxable municipal securities is fully taxable at the federal level and may be subject to tax at the state level. July trading patterns show lower bid-ask spreads for high-quality investing municipal bonds, improving liquidity conditions. This environment favors active traders looking to capture small yield differentials.