US municipal bonds

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US municipal bonds can offer comparable yields to investment grade corporate credit, while typically exhibiting higher credit ratings and lower historical default rates. They can therefore offer attractive diversification benefits alongside potential for returns.

Key benefits of taxable munis

Credit quality while maintaining yield: Yields comparable to corporate bonds with enhanced credit ratings.¹

Greater credit resilience: The quasi-public nature of municipal bonds has resulted in significantly lower historical default rates² and higher recovery rates than global corporate bonds.²

Opportunities for higher risk-adjusted returns: Taxable munis provide diversification benefits in a fixed income portfolio based on correlations.⁴

Read more: The case for US municipal bonds versus Treasuries

What are municipal bonds?

US municipal bonds are issued by US state and local governments, and non-profit entities to fund public infrastructure initiatives.

General obligation (GO) bonds

Funded via a municipality's full faith and creditworthiness, including the ability to levy taxes.

Revenue bonds

Secured by an income stream from a specific local infrastructure asset.

Taxable municipal bonds

A smaller but rapidly growing sub-set of the overall municipal bond market, provide income and yields which are often greater than similarly rated corporate bonds in the US and globally. This is particularly attractive to non-US investors. Given inefficiencies in market pricing, this at times opens up potential relative value opportunities across the taxable and tax-exempt markets.

Tax-exempt municipal bonds

Can be an attractive tax-efficient investment vehicle for US individual and corporate investors as the coupon interest income paid by these bonds is exempt from federal, and in many cases, state income taxes. While non-US investors would not benefit from the tax relief, these bonds can offer diversification benefits.

Why Insight for munis?

Read more: The case for revenue bonds

Strategies

Pooled fund options

BNY Mellon U.S. Municipal Infrastructure Debt Strategy

More information on funds Insight manages for BNY Mellon is available here.

Meet some of the team

The senior members of Insight’s municipal investment and trading teams have, on average, over two decades of experience in municipal bond markets.

Daniel Rabasco, CFA

Head of Municipal Bonds

Jeffrey Burger, CFA

Senior Portfolio Manager, Municipal Bonds