WASHINGTON — The Securities and Exchange Commission on Wednesday issued an Investor Bulletin designed to help buyers of municipal bonds better understand bonds' credit risks.
The four-page bulletin says investors should consider several factors including the type of bond, the purpose of the financing, the overall financial condition of the issuer, and the sources of funds that will be used to pay both principal and interest.
The SEC urges investors to conduct their own independent review of the credit risk of munis they are considering buying and not simply rely on short-hand labels such as "general obligation" and "revenue" bonds.
"Investors should gather as much relevant information as they can before spending their hard-earned dollars on any investment," said SEC Chairman Elisse Walter. "While I will continue to push for enhanced and more timely disclosure by those who issue municipal securities, investors should continue to learn all they can before purchasing them."
The bulletin provides lists of resources where investors can find more information about muni bonds.