Municipal Bonds: Individual Bond
Hallsville Independent School District (Harrison County, TX) Unlimited Tax School Building Bonds Series 2010A. (CUSIP: 406360MP9)
Buying an individual bond as opposed to shares in an ETF or mutual fund is a slightly different proposition. Individual bonds usually are traded by brokers or dealers on the OTC market and investors can purchase them online, usually for a flat fee. Investors may buy a municipal bond on the primary market when it is first issued or on the secondary market — the minimum entry point is usually about $5,000.
Individual bonds make sense for an investor who wants to exercise complete control over the investment and/or wants to avoid potential interest rate risk by holding the bond until maturity. That’s where the added safety of an individual bond’s credit rating comes in to play.
I currently like the Hallsville Independent School District (Harrison County, TX) Unlimited Tax School Building Bonds Series 2010A. (CUSIP:406360MP9). Moody’s upgraded Hallsville ISD’s credit rating last October to A1 from A3 — a move that favorably impacts the school district’s nearly $85 million debt. The school district, Moody’s observed, has boosted its financial reserves and has a new management team in place.
Additionally, the district settled outstanding taxpayer litigation and is growing its student enrollments.
The bonds represented above were part of a total issue of nearly $2.65 million in April 2010; they have a maturity date of Feb. 15, 2015, and have an interest rate of 4%.