It's not just students who may be thinking about school this fall. Income investors have an opportunity to invest in bonds that help finance school projects — and can possibly earn a yield of around 6% after tax considerations are taken into account. Local municipal general obligation bonds help fund operations or specific projects. For school districts, that can mean money for things like renovations or new buildings.
"It usually takes about three years for the market value to translate through to new higher revenues," Howard said. Local general obligation bonds also tend to be very highly rated, Howard said. About 45% are AAA rated, versus 21% in the broad muni market, he noted. "You are getting something that is high credit quality to begin with and we think the credit backdrop is relatively stable right now and could possibly improve," Howard said.
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