Municipal Inflation-Linked Securities

DEFINITION of 'Municipal Inflation-Linked Securities'

Investment vehicles issued by various levels of governments containing variable coupon payments that increase and decrease with changes in the consumer price index (CPI).

BREAKING DOWN 'Municipal Inflation-Linked Securities'

This type of debt security is similar to regular municipal bonds, but municipal inflation-linked securities offer investors a slightly lower coupon rate because these securities are safer than debt instruments that expose the holder to inflation risk. Also, because these securities carry reduced inflation risk, they don't - like other debt securities - have the potential to increase in price should the rate of inflation subside.

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