Municipalities levy taxes as their first source of revenue. Individual investors purchase the majority of municipal bonds. They mature in anywhere from one to fifty years. Like other bonds, they may also be bought at a discount. Municipals are considered relatively safe from default despite some adverse notoriety in past years.
Municipal bonds come in a variety of forms.
We will discuss those forms below. The two main forms of municipal bonds are general obligation and revenue. They have maturities of 10 years or more. GO bonds finance projects that do not produce revenue. The municipal issuer repays the bonds with funds raised by fees or property sales.