HilltopSecurities believes that capital markets facilitates economic growth. By helping you understand the buying and selling of equity and debt instruments, we will establish the foundation of a fruitful partnership. We deliver dedicated expertise and experience in trading, sales and underwriting to municipalities, institutional clients, dealers and investors throughout the U.S. If you have any questions that are not covered on this page, please feel free to contact us.
Who may consider them, why you may consider them, and how they work.
Generally considered the second safest asset class behind U.S. treasuries, Municipals (also called Munis) offer income or appreciation that is exempt from regular Federal income tax, and generally State and Local income taxes (based on the location of the issues). Bonds are purchased by individual investors in high income tax brackets, and are favored particularly by those in high combined federal and state income tax brackets. To demonstrate, to compete with a municipal yielding 5 percent, a top bracket investor in the state of California would need to realize a taxable yield of 8.89 percent; in New York State, 8.35 percent; in Texas, 7.69 percent; and in Massachusetts, 8.12 percent.* Combine that return with an understanding of the historic safety of municipals relative to other asset classes, and generally good liquidity, then you are well on your way to answering the question, "Why municipal bonds?".