What is Revdex?

Revdex, a colloquial moniker that is a contraction of "25 revenue bond index", approximates the yield that an investor will receive if they buy revenue bonds maturing in 30 years.

Key Takeaways

  • Revdex, a colloquial moniker that is a contraction of "25 revenue bond index", approximates the yield that an investor will receive if they buy revenue bonds maturing in 30 years.
  • Investors can use the Revdex to gauge how the municipal market is faring, which can greatly aid them in their investment decision process.
  • Revdex, along with Bond Buyers Index (BBI), are to the municipal bond market what the Dow Jones Industrial Average (DJIA) is to the stock market.

Understanding Revdex

Revdex is composed of 25 revenue bond issues, all with a maturity rating of A or better. Essentially, the index provides an estimate of the yield on a 30-year revenue bond offered under current market conditions.

The 25 bonds in the Revdex are from a wide range of industries with a variety of ratings that estimates the yield on 30-year revenue bonds. The 'Rev' portion of its name refers to the fact that it helps predict the return on revenue bonds. Both individual consumers and investors can use the Revdex to gauge how the municipal bond market is faring, which can greatly aid them in their investment decision process.

There are two types of tools that are used to measure the performance of the municipal market - the Bond Buyer’s Index (BBI) of high-grade general obligation bonds and the Bond Buyer's Revenue Bond index (Revdex). These are to the municipal bond market what the Dow Jones Industrial Average (DJIA) is to the stock market.

The revenue bonds used in the Revdex vary in the project types that they are issued for, such as bridges, tolls, housing, sewage and hospitals. It's this variety that is useful to investors when they are attempting to gauge the rate of return that might be obtained on a 30-year revenue bond under current market conditions. Basically, the Revdex provides the investor with a better sense of the "going rate" that might be expected on a revenue bond and, thus, help them to evaluate the investment value of any individual revenue bond. 

Revdex can be accessed through The Bond Buyer. The Bond Buyer is a subscription based and is available as both a paper and digital newspaper that is published every weekday and provides information about municipal issues, including bonds.