Definition

Municipal bond (noun): A debt security issued by a state, city, county, or other local government entity to finance public projects such as roads, schools, and infrastructure. The bond represents a loan made by an investor to the issuer, who promises to repay the principal with interest.

Usage

A municipal bond is a specific type of investment instrument. It is typically used to describe the bond itself or to discuss its characteristics. * The city issued a municipal bond to raise funds for the new water treatment plant. * Investors often buy municipal bonds for their tax-advantaged income.

Advanced Usage

• General Obligation Bond: A type of municipal bond backed by the full faith and credit (and taxing power) of the issuing municipality.
  • The general obligation bond was approved by voters to fund the school district's renovations.
• Revenue Bond: A type of municipal bond repaid from the revenue generated by the specific project it finances (e.g., a toll bridge or an airport).
  • The airport expansion was funded through a revenue bond.

Variants and Related Words

• Muni (noun, informal): A common abbreviation for "municipal bond."
  • He has a portfolio heavily weighted in munis.
• Municipal (adjective): Of or relating to a city or town or its local government.
  • The municipal government approved the budget.

Synonyms

• Local government bond
• Tax-exempt bond (Note: While many municipal bonds are tax-exempt, this is a feature, not a strict synonym.)

Related Phrases

• Bond issuance: The process of offering and selling bonds to investors.
  • The bond issuance was oversubscribed by institutional investors.
• Tax-free interest: Interest income that is exempt from federal, and sometimes state and local, income taxes—a key feature of many municipal bonds.
  • One major attraction of these bonds is the tax-free interest.

Noun

1. a bond issued by a state or local government