# Municipal Bond

*Markets & Instruments — Finicade finance glossary*

A municipal bond is debt issued by a state, city or local authority, and in the US its interest is generally exempt from federal income tax. That exemption is the entire pricing story: munis yield less than taxable bonds, so comparing them requires a tax-equivalent yield. For a high-bracket investor a 3.5% muni can beat a 4.6% corporate. Credit quality ranges from near-Treasury general obligation debt to revenue bonds backed by a single project's cash flows.

**Also known as:** muni bond, munis, tax-exempt bond

**Related terms:** [Corporate Bond](https://finicade.com/glossary/corporate-bond), [Treasury Bond](https://finicade.com/glossary/treasury-bond), [Tax-Equivalent Yield](https://finicade.com/glossary/tax-equivalent-yield), [Credit Rating](https://finicade.com/glossary/credit-rating), [Bond](https://finicade.com/glossary/bond)

Source: https://finicade.com/glossary/municipal-bond