Today’s Bond Values

Bond values fluctuate depending upon the prevailing trends in market interest rates at the time of a muni’s issuing. The interest rate for municipal bonds is also referred to as a coupon in the financial world. These ‘coupon rates’ are set for a bond when it is first issued and remain forever fixed, something that makes investing in municipal bonds unique and appealing for so many, for when general interest rates on the market happen to fall during a given period, bond values may garner a premium if their static interest rates, which are unaffected, happen to be greater.

Municipal Bonds & Interest Rates

The market also determines the rate at which bond issuers set the coupon. Naturally, they must offer interest rates that are competitive to other bonds of similar maturity on the current market. As market interest rates are subject to continual rise and fall, muni rates may rest above or below the line set by the market in any given fiscal year. Thus, the standard coupon rate for newly issued municipal bonds may be higher or lower than the trend for the following financial period, which will be reflected in the bond values for that term. A bond with a coupon rate of 8%, which may have been the standard one year ago, will hold more value than a newly issued bond with a coupon rate of 7%.

Tools for Determining Bond Values

In order to calculate the current market value of municipal bonds, a holder must keep track of a number of associated properties. The future value, period to maturity, coupon rate, and the amount of interest paid to issuers during a fiscal year must all be considered when determining the value. One can utilize various programs for bond portfolio analysis, namely specialized spreadsheet applications or financial calculators that, in the hands of investors or municipal bond managers who understand the market and what’s needed to properly calculate bond values, do a respectable job of properly providing the needed information. This process may be a bit impenetrable for those who are math deficient.

Modern Municipal Bonds Management

In today’s web-connected world, many municipal bond portfolio management services have sprouted up on the net that work to ease the process, making it more accessible for those not gifted with a proficient capacity for calculating numbers and equations. What these online services are bringing to the table in this arena is the ability to instantly look up all of the essential information related to a particular bond. By streamlining the process involved with assessing bond values, investors can more comfortably focus on making the important decisions necessary for managing successful muni portfolios.