2.15. Municipal Bonds

Municipal bonds are issued by states, cities, and counties to raise capital for their day-to-day operations. They are issued by school districts, highway departments, and other public authorities to finance specific projects, such as public education, highway construction, football stadiums, and mass transit systems.

Municipal bonds are different from corporate and other government bonds because they are generally exempt from federal government oversight. They are exempt from SEC registration, and issuers do not have to publish a prospectus. Instead, issuers offer a disclosure document called an official statement. This document contains detailed information about the bonds and the financial condition of the issuer, as well as a legal opinion verifying the municipality’s authority to is