Municipal securities appeal to a narrower range of investors, those domestic investors able to take advantage of the tax characteristics of these securities. Conclusion As outlined earlier, the most significant difference between Federal and Municipal finance is that we employ unitary financing for the federal government. Unitary financing allows us to best meet our goals and abide by the principles previously outlined. Through unitary financing, we are able to issue large liquid issues across the yield curve. Through unitary financing, we are able to be consistent and predictable.
Municipalities use segregated financing largely due to the legal framework in which they finance.
In addition, many municipal bond investors seek diversification through owning bonds issued by different authorities. These factors are not relevant to the Federal Government. It may be interesting to share with the Commission a particular aspect in the history of Federal finance. Prior to 1973, the Federal Government actually had multiple issuing authorities. In this environment, many federal agencies issued their own securities to fund their programs.