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What Municipal Bond Investors Need To KnowIs compensation at least fair in relation to credit risk, and what is the quantitive difference in risk between credit ratings applied? Municipal bond ratings are notoriously inaccurate in answering the first part of the question, off by at least one full rating grade or more about 50% of the time, and don't offer an opinion on the second part.That places individual investors at a decided disadvantage to their institutional bond buying counter-parts. Institutions employ municipal credit experts to identify under, over and fairly rated issues, and warn against rating downgrades on risks they own or are considering for purchase.The municipal markets opaqueness works against the least and for the most informed. The credit spread between single-A and triple-B rated long term municipal bonds typically ranges from 25-40 basis points per annum. At the top range, that is $400 per 100 bonds ($100,000) per annum or 4% of par over ten years. BBR provides highly reliable intelligence for individuals who invest directly in new and secondary market municipal bond issues.
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