Municipal Bonds: Information Sources At-a-Glance

Thinking about investing in municipal bonds? Key information is available, you just need to know where to look.

 

Important Investor Information

  • Disclosure documents—including a bond's Official Statement (similar to a prospectus), annual financial reports, and other continuing disclosures such as notices of ratings changes, principal and interest payment delinquencies and defaults—are available through the Municipal Securities Rulemaking Board's (MSRB) Electronic Municipal Market Access (EMMA) website at www.emma.msrb.org. There is no charge for using EMMA.
  • Issuers may also publish information on their own websites.

 

Tip: To verify whether a bond's issuer or other person obligated to repay all or part of the debt (obligated person) is current in its disclosure filings, check the EMMA website and ask your investment professional.

 

Bond Features

  • To learn about a bond's key features and risks, review the bond's Official Statement and supplements on EMMA.
  • To learn about a bond's duration, a number which indicates how sensitive a bond or bond fund is to changes in interest rates, look in the fund's Fact Sheet or, for an individual bond, ask your investment professional.

 

Price and Trade Information

  • Real-time price and trade data, along with interest rates for variable rate bonds, are also found on EMMA.
  • Investment firms that buy and sell municipal bonds also generally provide trade and price information. Be sure to ask your investment professional about the pricing of a bond. Ask questions about the transaction prices reported to EMMA for the same security and securities with similar features and characteristics.

 

Customized Data

  • Many vendors specialize in packaging trade and price data, offering documents and ongoing disclosures, usually for a fee.
  • Some investment firms and investment professionals might subscribe to these services and share this information with their customers.
  • Other investment firms that specialize in municipal bonds might prepare their own customized municipal bond data or reports.

 

Compensation

  • Although most investment professionals are compensated on a per-trade basis, there is no standard charge for bond transactions. Some firms may add a flat dollar amount per trade or per bond. Other firms may charge a percentage of the transaction amount. The firm's compensation is included in the total cost of the transaction and is not always displayed as a separate line item on your confirmation statement. Ask your investment professional how he or she is paid for conducting bond transactions and how the compensation appears on the confirmation statement.

 

Credit Ratings

  • Ask your investment professional for the current published ratings on any bond you are considering or already hold. EMMA provides certain current credit ratings for municipal bonds. Realize that ratings are opinions only and should be only one of many factors in evaluating a municipal bond investment. Note: some municipal bonds are not rated, and you should be particularly cautious when considering such bonds.
  • Providers that specialize in municipal bond data might also offer ratings information, usually for a fee.

 

Tax Implications

  • Read the tax disclosures in the offering documents and consider consulting a tax professional to discuss the bond's tax implications, including the possibility that your bond may be subject to the federal Alternative Minimum Tax (AMT) or may not provide state tax benefits, and what this may mean for your specific situation.

 

Information About Investment Professionals and Firms

  • An investment professional must be registered properly to sell municipal securities. Similarly, his or her firm must be registered with the MSRB, FINRA (unless a bank) and the SEC in order to conduct business in municipal securities.
  • To learn about the registration and disciplinary history of an investment professional or firm, visit FINRA BrokerCheck at www.finra.org/brokercheck or call toll-free (800) 289-9999. To confirm the MSRB registration of an investment firm, review the MSRB's Registered Dealers List.

 

Additional Educational Information