Puerto Rico municipal bonds are issued by the commonwealth of Puerto Rico and its various entities that offer an advantage of compelling tax to the investors. The interest generated from these obligations is exempt from state, local and federal taxes. Puerto Rico municipal bonds are suitable for those investors who are looking for a tax free income. These bonds are outstanding and mostly held by the U.S Mainland investors that include commercial banks, individuals, bond funds and insurance companies. The Puerto municipal bonds enjoy various special qualities that help to keep their demand at high levels.
It provides triple tax free exemption of the bond that means that the investors belonging to any state do not need to pay for local, state or federal taxes. The investors in high tax brackets can obtain maximum benefits from Puerto Rico municipal bonds. These bonds have received BBB ratings from the rating agencies. The tax free status of Puerto Rico municipal bonds attracts the investors with higher brackets. Investors who have long term horizons particularly benefit from these municipal bonds.
The interest on Puerto Rico municipal bonds is not subject to state, local or federal income taxes. They generally offer higher yields compared to the other municipal bonds that are issued by the United States. The Puerto Rico general obligation bonds are considered to be a safer bond option since it ensures the safety of the interest and the principal amount of money. The puero Rico general obligation bonds are backed by the full faith of the government
Puerto Rico municipal bonds come with a certain amount of risks. So it is wise to consult a municipal bond broker before investing in these bonds. The demand for these bonds are more since they possess a triple tax exemption feature with the interest that is exempt from the state taxes in all the states. The quality of these bonds is thoroughly examined by the rating agencies such as Fitch, Standard & Poors and Moodys.
If you purchase these bonds from the same state then it is free from the federal and state taxes. These bonds come with lesser default rates and they provide the government with the necessary funds. These funds are utilized in several projects. Puerto Rico municipal bonds are considered to be riskier than the other municipal bonds but the investors are benefited by the after tax yields.
Puerto Rico municipal bonds should be carefully inspected before investing in them. It is best to take an opinion of the bond broker before making a decision to invest in these bonds. The bond broker must be highly qualified in order to provide you with the right investment decision. The investor can go through the disclosure materials that is provided by the Electronic Municipal Market System.