Intermediate-Term Municipal Bond

Intermediate-term municipal bonds are debt securities, issued by state and local governments,... Intermediate-term municipal bonds are debt securities, issued by state and local governments, which typically have a duration of 4-7 years. With duration indicating a bond's likely price change due to a change in interest rates, intermediate-term bonds are more sensitive to changes in interest rates than short-term bonds, but less sensitive to interest rate changes compared to long-term bonds. Some conservative investors may purchase investment-grade intermediate-term municipal bonds in order to generate income in the medium term while being confident that the bond issuer is unlikely to default. Typically, the states of New York and California issue intermediate-term municipal bonds with a mandate that at least 80% of their assets should be in debt issued by either the state or local governments. Like other municipal bonds, the interest payments from these securities are typically exempt from federal taxation. Interest payments can be also tax-free at the state level if investors are residents of the state issuing the bonds. Last Updated: 01/17/2025 View more View less

Intermediate-term municipal bonds are debt securities, issued by state and local governments, which typically have a duration of 4-7 years. With duration indicating a bond's likely price change due to a change in... Intermediate-term municipal bonds are debt securities, issued by state and local governments, which typically have a duration of 4-7 years. With duration indicating a bond's likely price change due to a change in interest rates, intermediate-term bonds are more sensitive to changes in interest rates than short-term bonds, but less sensitive to interest rate changes compared to long-term bonds. Some conservative investors may purchase investment-grade intermediate-term municipal bonds in order to generate income in the medium term while being confident that the bond issuer is unlikely to default. Typically, the states of New York and California issue intermediate-term municipal bonds with a mandate that at least 80% of their assets should be in debt issued by either the state or local governments. Like other municipal bonds, the interest payments from these securities are typically exempt from federal taxation. Interest payments can be also tax-free at the state level if investors are residents of the state issuing the bonds. Last Updated: 01/17/2025 View more View less