The Securities and Exchange Commission today issued an Investor Bulletin to help purchasers of municipal bonds better assess the bonds’ credit risks.
The bulletin provides several factors for investors to consider including the type of the bond, the purpose and nature of the financing, the overall financial condition of the issuer, and the sources of funds to pay both principal and interest. The bulletin also urges investors to undertake their own independent review of municipal bonds’ credit risk and not rely solely on a credit rating or a short-hand label such as “general obligation” or “revenue” bond when deciding whether to purchase a municipal bond.