When investors loan bond funds to a municipality, they are expecting a rate of return on their investment. Unlike a mortgage where one bank loans the entire amount to a borrower, in a municipal bond financing there are typically multiple investors who loan funds based on their desired maturity length and other factors.
Read MoreA traditional feature of many municipal bonds is their tax-exempt status. For investors who purchase certain municipal bonds, the interest received can be exempt from state and/or federal income tax.Tax exemption is an important aspect of municipal bonds that benefits municipalities, investors and the public.
Read MoreCalifornia K-14 districts can elect to have their bonds approved under proposition 39 or Proposition 46. Selecting Proposition 39 or Proposition 46 for a bond election could be a political, facility-related, financial, or timing decision, among others.
Read MoreBond underwriters serve an important role in municipal bond transactions. An underwriter markets an issuer’s bonds, purchases them from the issuer and resells them to investors. Any unsold bonds are generally underwritten, meaning that the underwriter utilizes their own capital to purchase the balances and takes the risk of interest rate fluctuations.
Read MoreAssessed value (“AV”) is the dollar amount of taxable property within district boundaries on a county assessor’s roll. Taxable property includes residential property such as single family homes, condos and apartments, and non-residential property such as commercial, industrial and agricultural properties. Learn what assessed value is in the blog post.
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Chet Wang is a registered municipal advisor with an exclusive focus on California education municipal bonds.
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