municipal bond: meaning, definition, pronunciation and examples
C1Formal, Technical, Financial
Quick answer
What does “municipal bond” mean?
A debt security issued by a local government or municipality to finance public projects such as roads, schools, or utilities.
Audio
Pronunciation
Definition
Meaning and Definition
A debt security issued by a local government or municipality to finance public projects such as roads, schools, or utilities.
A type of fixed-income investment where investors lend money to a local government entity in exchange for periodic interest payments and the return of principal at maturity; often favored for potential tax advantages on interest income.
Dialectal Variation
British vs American Usage
Differences
The term is identical in both varieties. The concept exists in both markets, though specific regulations and tax treatments differ.
Connotations
In both varieties, connotes public infrastructure financing, conservative investment, and tax efficiency.
Frequency
Slightly more frequent in American English due to the larger and more prominent municipal bond market in the United States.
Grammar
How to Use “municipal bond” in a Sentence
[Investor] purchased [a municipal bond] from [the city].[The council] issued [municipal bonds] to fund [the new hospital].Vocabulary
Collocations
Examples
Examples of “municipal bond” in a Sentence
verb
British English
- The county council is planning to bond for the new leisure centre.
- They decided to bond the project over ten years.
American English
- The city voted to bond for sewer system upgrades.
- They bonded the construction last fiscal year.
adjective
British English
- The municipal-bond market showed resilience.
- They sought municipal-bond advice.
American English
- The municipal bond market was volatile.
- She is a municipal bond analyst.
Usage
Meaning in Context
Business
Discussed in financial reports, investment portfolios, and city budget meetings.
Academic
Analyzed in economics, public finance, and political science papers regarding local government funding.
Everyday
Rarely used; might appear in personal finance news or discussions about local taxes and projects.
Technical
Precisely defined in finance, with distinctions between general obligation, revenue, and conduit bonds.
Vocabulary
Synonyms of “municipal bond”
Strong
Neutral
Weak
Vocabulary
Antonyms of “municipal bond”
Watch out
Common Mistakes When Using “municipal bond”
- Using 'municipal' to describe corporate bonds.
- Confusing it with 'government bond' (which typically refers to national debt).
- Misspelling as 'municiple bond'.
- Assuming all municipal bonds are risk-free.
FAQ
Frequently Asked Questions
No, many municipal bonds have low minimum investments, making them accessible to a range of investors.
No, it is not guaranteed like a bank deposit. There is a risk of default, though it is historically lower than for corporate bonds.
A general obligation bond is backed by the taxing power of the issuer. A revenue bond is backed by the income from a specific project like a toll road or utility.
Yes, potential losses can occur if the issuer defaults, if you sell before maturity when interest rates have risen, or due to inflation eroding returns.
A debt security issued by a local government or municipality to finance public projects such as roads, schools, or utilities.
Municipal bond is usually formal, technical, financial in register.
Municipal bond: in British English it is pronounced /mjuːˌnɪsɪpəl ˈbɒnd/, and in American English it is pronounced /mjuːˈnɪsəpəl ˈbɑːnd/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “as safe as a muni”
- “muni money”
Learning
Memory Aids
Mnemonic
Think of MUNI-cipal bonds as money for the MUNIcipalITY - lending cash to your city.
Conceptual Metaphor
INVESTMENT IS A LOAN TO THE COMMUNITY.
Practice
Quiz
What is a primary characteristic of many municipal bonds in the United States?