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    What are US Municipal Bonds? Case Studies

    What are US Municipal Bonds? Case Studies

    31 January 2025 Fixed income

    US municipal bonds explained

    In our experience, for many investors outside the US, the municipal bond market remains an underappreciated asset class.

    US municipal bonds are bonds issued by agencies and authorities of US states, cities or local government bodies. They can take the form of general obligation (GO) bonds, funded via tax revenues, or revenue bonds, secured by an income stream from a specific local infrastructure asset. Historically, this has meant that default rates have been low, making munis an attractive investment for risk averse investors, and a way to diversify corporate bond holdings.

    The fragmentation of the US municipals market means there are potentially considerable opportunities for active managers to exploit, we believe. However, these characteristics require detailed credit analysis by a specialist team to truly understand each bond issue. For revenue bonds, this means undertaking painstaking analysis to assess the unique risks and characteristics of the underlying infrastructure assets underlying each instrument.

    In this whitepaper, we provide examples of US municipal bond issuers that we have at one time held, currently hold or taken an active decision to not hold, as well as examples of the projects their bons issues finance. The examples used are for illustrative purposes only and are not investment recommendations.

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