Define mig1 rating for municipal bonds?
There are four rating categories for short-term obligations that define an investment grade situation. These are designated Moody's Investment Grade as MIG 1 (best quality) through MIG 4 (adequate quality). Short-term obligations of speculative quality are designated SG. In the case of variable rate demand obligations (VRDOs), a two-component rating is assigned. The first element represents an evaluation of the degree of risk associated with scheduled principal and interest payments, and the other represents an evaluation of the degree of risk associated with the demand feature. The short-term rating assigned to the demand feature of VRDOs is designated as VMIG. When either the long- or short-term aspect of a VRDO is not rated, that piece is designated NR, e.g., Aaa/NR or NR/VMIG 1. Issues or the features associated with MIG or VMIG ratings are identified by date of issue, date of maturity or maturities or rating expiration date and description to distinguish each rating from other ratings. Each rating designation is unique with no implication as to any other similar issue of the same obligor. MIG ratings terminate at the retirement of the obligation while VMIG rating expiration will be a function of each issue's specific structural or credit features. MIG 1/VMIG 1 This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG 2/VMIG 2 This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group.
MIG 3/VMIG 3 This designation denotes favorable quality. All security elements are accounted for but there is lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.
MIG 4/VMIG 4 This designation denotes adequate quality. Protection commonly regarded as required of an investment security is present and although not distinctly or predominantly speculative, there is specific risk.
SG This designation denotes speculative quality. Debt instruments in this category lack margins of protection.
Interest from municipal bonds is exempt from federal income taxes. Some states exempt certain bonds, most commonly in-state bonds, from tax as well. But a few are taxable. Corporate Bonds are in most cases taxable, I've enclosed a list of State of Washington Municipal (tax free) bonds. http://investment-income.net/rates/wa-municipal-bonds-rate-page
wHA ARE tAXABLE mUNICIPAL bONDS Are they suitable for IRA investments. Why are they issued compared to Tax Exempt Municipal Bonds?
Taxable municipal bonds are bonds issued by governments (municipal bonds) that are NON-tax exempt (most munis are.) They are often better for IRA investments than tax-exempt bonds because they tend to pay higher interest rates and IRAs are tax exempt anyway. They are issued for a variety of reasons (often, they don't count against a bond issuers' cap) but, in part, because they are a good investment vehicle for IRAs and other tax exempt accounts.
Municipal bonds are issued by state and local governments. The proceeds from these bonds are used for a wide range of purposes. They fund water projects, roads, housing and resource recovery plants. They may also be used for paying the normal operating expenses of a governmental entity. Investors in high tax brackets often have a portion of their portfolios invested in municipal bonds because these bonds are exempt from federal taxes. Bonds from a particular…
Both state and local government entities issue municipal bonds, and the interest is generally exempt from federal income tax. This is done because the funds from the bond issue will be used to fund necessary government services or infrastructure projects. In addition the agencies issuing the bonds are given lower interest rates when they invest in public services and projects. In most states, if you buy municipal bonds, the interest income you earn will also…