Unlike original issue discount, market discount on tax-exempt bonds results in taxable income. The steady rise in interest rates has caused many bonds, even those originally issued with a substantial premium, to trade with taxable market discount. The impact of market discount on secondary market pricing and liquidity can be significant. How is this dynamic driving issuer and investor decision-making about bond structures, coupons and the secondary market for tax-exempt bonds?
Industry insiders dive into the issues surrounding market discount and share perspectives on how it affects bond trading dynamics and market behavior.
Key Discussion Topics:
- The de minimus tax rule and other tax aspects of market discount, explained.
- How market discount is impacting the primary and secondary markets.
- Potential solutions for bonds with market discount.
