Municipal bonds are issued for periods ranging from one year to 40 years, although short-term municipal notes are also available. New issues of municipal securities are sold weekly to syndicates, (groups of dealers), who bid competitively for the issues. Existing issues are available through the secondary market.

Munis generally trade in stacks of $5,000, but can trade in the even more basic unit of $1,000. Short-term municipal notes generally trade in multiples of $100,000. As with other bonds, munis generally pay interest semi-annually, although this is not a fixed rule. Monthly, quarterly and annual payment schedules are not unheard of, and short-term notes generally pay interest at maturity.

Munis have one of three types of maturities:

  1. Term: The entire issue matures simultaneously and after a long period; used to finance projects for which short-term revenues are uncertain.
    • term (dollar) bonds are quoted as a price, or as a percentage of par.

  2. Serial: Issue matures over a period of several years; used for projects with more predictable revenues.
    • serial bonds are quoted in basis points.

  3. Serial with balloon: A hybrid of term and serial; most bonds mature in a single "balloon" year.

Since 1983, municipal bonds have been issued in registered form only, meaning the purchaser's name is registered on the issuer's books and appears on the bond. Today a growing number of municipal bonds are issued in book-entry form. Both processes are beneficial as they provide protection from loss or theft, automatic payment of interest, notification of calls and ease of transfer. Let's take a closer look at book-entry issuances.

  • term (dollar) bonds are quoted as a price, or as a percentage of par.

  • Unregistered Munis
    • serial bonds are quoted in basis points.



  • Muni Pricing

    Related Articles
    1. Investing

      5 Reasons to Invest in Municipal Bonds When the Fed Hikes Rates

      Discover five reasons why investing in municipal bonds after the Fed hikes interest rates, and not before, can be a great way to boost investment income.
    2. Investing

      A Look at the Pros and Cons of Muni Bonds

      Considering muni bonds? Here's a look at their pros and cons.
    3. Financial Advisor

      How to Find the Best Bets in Muni Bonds

      Approach investing in municipal bonds the same as you would investing in stocks.
    4. Investing

      What Is A Municipal Bond?

      A municipal bond is a debt instrument used by a city, state, county or other local government authority to raise money for a project. Municipal bonds, often called munis, are considered a debt ...
    5. Investing

      Avoid Tricky Tax Issues On Municipal Bonds

      Learn the rules every investor should know before buying into this "tax-free" investment.
    6. Investing

      Do Municipal Bond Mutual Funds Offer a Tax Incentive?

      Learn about individual municipal securities and municipal bond funds, whose principal stability and tax-free yield appeal to high-income investors.
    7. Investing

      The Basics Of Municipal Bonds

      Investing in these bonds may offer a tax-free income stream but they are not without risks.
    8. Financial Advisor

      Top 4 Ways to Avoid Muni Bond Mistakes

      Muni bonds are often perceived as safe investments. But it's important to do some thorough research before investing.
    9. Financial Advisor

      Advising FAs: Explaining Bonds to a Client

      Most of us have borrowed money at some point in our lives, and just as people need money, so do companies and governments. Companies need funds to expand into new markets, while governments need ...
    Frequently Asked Questions
    1. Depreciation Can Shield Taxes, Bolster Cash Flow

      Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
    2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

      Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
    3. How many attempts at each CFA exam is a candidate permitted?

      The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
    4. What's the average salary of a market research analyst?

      Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
    Trading Center