Texas Municipal Bonds – Are They Safe To Invest In?

Texas Municipal Bonds

Are Texas municipal bonds safe to invest in? The answer will vary, depending on the specific municipal bond chosen in this state. Municipal bond interest rates may be different from one bond to the next, and some will pay a higher rate than others. While munis have been considered a safe investment this has not always held true in the last few years, and some cities and other municipalities have have to default on bond payments or even declare bankruptcy. Texas municipal bonds may or may not be safe, depending on the specific bond that is purchased. Some of these bonds have done very well, while others have made the list of the most likely bonds to default.

Bonds investing that involves municipal bonds has seen some problems, and this has been caused in part by the global economic downturn. Municipal entities are facing lower incomes because of the drop in employment, the housing market, and other sectors. Some Texas municipal bonds are rated very likely to default by the credit rating agencies, and have a credit rating which is not investment grade. The best municipal bonds will be rated AAA, and any which do not carry this top rating will involve higher risks.

Zero coupon municipal bonds carry the same risks as other types concerning the possibility of default. Some municipal entities in Texas have issued bonds that are rated as poor, and these may not be a safe investment for most. Cluberson County Hospital District, Texas, has a bond which is rated BBB-, one of the lower rated Texas municipal bonds possible. Robstown, Tulia, and Littlefield are all Texas towns and cities with risky municipal bond offerings. For some investors municipal bond prices may seem like a good deal because of the expected safety of this bond type, but some munis are a bad investment choice because of the high risks faced today by investors in this market.