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Bond Information

Interest payments

Bond interest is usually paid semiannually. On notes, interest is typically paid at maturity.

Form of issuance. Since July 1983, as a result of federal tax law changes, municipal bonds have been issued in registered form only. With a registered security, your name is registered on the issuer’s books and appears on the bond.

A growing number of municipal bonds today are issued in “book-entry” form – similar to the way U.S. government securities are issued. Ownership is recorded through data entry at a central clearinghouse. Your confirmation of purchase from your bank or investment firm provides you with a written record of the transaction. With book-entry securities, physical transfer of certificates is not necessary.

Registered and book-entry bonds offer a number of protections and conveniences to bondholders, including protection from loss or theft, automatic payment of interest, notification of calls and ease of transfer, among others.

Before July 1983, municipal securities were issued for the most part in cert ificate form with coupons attached. Some of these so-called bearer bonds are still available in the marketplace. The issuer has no record of who owns these bonds. The owner clips the coupons and collects the interest from the issuer’s paying agent. Transferring the bonds requires physical delivery and payment.

Reporting requirements

All tax-exempt interest must be reported on tax returns. This is simply a reporting requirement and does not affect the tax-exempt status of the security.

Minimum investment

Most tax-exempt municipal bonds are issued in denominations of $5,000 or integral multiples of $5,000. Most notes are also available with a minimum denomination of $5,000.

Payment terms

Dealers are required by the Securities and Exchange Commission to have payment for a securities purchase and to make payment for a securities sale no later than the third business day following the date of the trade.

Where to find listed prices

Financial newspapers and business pages of major daily newspapers usually list prices of widely traded municipal securities. Additionally, you can find information on the Internet through various individual investor Web sites. Because the prices are typically based on $1 million lots and reflect a volume discount, purchases and sales of smaller amounts may differ according to the size of the order. You can also receive price quotes from a municipal securities broker-dealer.


Holders of municipal securities can sell their notes or bonds in the secondary market through one of the many banks and securities dealer firms which are registered to buy and sell municipal securities. Municipal bonds are sold in the over-the-counter market instead of on an organized exchange. If you sell your bonds prior to maturity, you will receive the current market price, which may be more or less than their original cost.

What are the costs of investing in municipal bonds?

Municipal securities are bought and sold between dealers and investors much like other debt instruments. Dealers trade the securities at a net cost, which includes their own spread, or profit, on the transaction.

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