Bonds 755

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Qualified and Specified Tax Credit Bonds - General FAQs

Qualified tax credit bonds allow quarterly tax credits to bondholders, specified tax credit bonds provide a direct payment to the issuer instead of a tax credit to bondholders

The par real curve, which relates the par real yield on a Treasury Inflation Protected Security (TIPS) to its time to maturity, is based on the closing market bid prices on the most recently auctioned TIPS in the over-the-counter market. The par real yields are derived from input market prices, which are indicative quotations obtained by the Federal Reserve Bank of New York at approximately 3:30 PM each business day. Treasury began publishing this series on January 2, 2004. At that time Treasury released 1 year of historical data.

These rates are indicative closing market bid quotations on the most recently auctioned Treasury Bills in the over-the-counter market as obtained by the Federal Reserve Bank of New York at approximately 3:30 PM each business day.

Treasury ceased publication of the 30-year constant maturity series on February 18, 2002 and resumed that series on February 9, 2006. To estimate a 30-year rate during that time frame, this series includes the Treasury 20-year Constant Maturity rate and an "adjustment factor," which may be added to the 20-year rate to estimate a 30-year rate during the period of time in which Treasury did not issue the 30-year bonds. Detailed information is provided with the data

Beginning on January 2, 2004, Treasury began publishing a Long-Term Real Rate Average. This series is intended for use as a proxy for long-term real rates. Treasury provides historical data back to 2000.

The revised regulations, which were published on 6/10/2024 and become effective 8/9/2024, create two new categories of reinsurers - Complementary and Alien. Please refer to the Implementation Guide for additional information and direct any questions to the Surety Bond Branch at Surety...@fiscal.treasury.gov.

The Department Circular 570 offers a complete list of companies that write or reinsure federal bonds. Circular 570 was updated on July 1, 2024. Other listings are also provided below. Links for Complementary and Alien Reinsurers will be added later.

The Surety Bond program no longer accepts paper submissions - all submissions must be sent electronically by e-mail. For more detailed instructions, visit the Getting Started page for your application type: Authorized Pool/Associations, Admitted Reinsurers, or Authorized Surety/Reinsurer of Federal Bonds.

Bonds are issued by governments and corporations when they want to raise money. By buying a bond, you're giving the issuer a loan, and they agree to pay you back the face value of the loan on a specific date, and to pay you periodic interest payments along the way, usually twice a year.

A security that represents part ownership, or equity, in a corporation. Each share of stock is a proportional stake in the corporation's assets and profits, some of which could be paid out as dividends.

A market where investors purchase securities or assets from other investors, rather than from the issuing companies. The national exchanges, such as the New York Stock Exchange and Nasdaq, are secondary markets.

But if you buy and sell bonds, you'll need to keep in mind that the price you'll pay or receive is no longer the face value of the bond. The bond's susceptibility to changes in value is an important consideration when choosing your bonds.

The language of bonds can be a little confusing, and the terms that are important to know will depend on whether you're buying bonds when they're issued and holding them to maturity, or buying and selling them on the secondary market.

Yield: This is a measure of interest that takes into account the bond's fluctuating changes in value. There are different ways to measure yield, but the simplest is the coupon of the bond divided by the current price.

Price: This is the amount the bond would currently cost on the secondary market. Several factors play into a bond's current price, but one of the biggest is how favorable its coupon is compared with other similar bonds.

For example, if current interest rates are 2% lower than your rate on a mortgage on which you have 3 years left to pay, it's going to matter much less than it would for someone who has 25 years of mortgage payments left.

Because bonds with longer maturities have a greater level of risk due to changes in interest rates, they generally offer higher yields so they're more attractive to potential buyers. The relationship between maturity and yields is called the yield curve.

The degree of fluctuation in the value of a security, mutual fund, or index, volatility is often expressed as a mathematical measure such as a standard deviation or beta. The greater a fund's volatility, the wider the fluctuations between its high and low prices.

The 2 best-known agencies that rate bonds are Standard & Poor's (S&P) and Moody's Investors Service. They have similar ratings systems, which are based on the issuer's current financial and credit histories.

Companies can issue bonds, but most bonds are issued by governments. Because governments are generally stable and can raise taxes if needed to cover debt payments, these bonds are typically higher-quality, although there are exceptions.

You'll have to pay federal income tax on interest from these bonds, but the interest is generally exempt from state tax. Because they're so safe, yields are generally the lowest available, and payments may not keep pace with inflation. Treasuries are extremely liquid.

These bonds are typically high-quality and very liquid, although yields may not keep pace with inflation. Some agency bonds are fully backed by the U.S. government, making them almost as safe as Treasuries.

Because mortgages can be refinanced, bonds that are backed by agencies like GNMA are especially susceptible to changes in interest rates. The families holding these mortgages may refinance (and pay off the original loans) either faster or slower than average depending on which is more advantageous.

If interest rates rise, fewer people will refinance and you (or the fund you're investing in) will have less money coming in that can be reinvested at the higher rate. If interest rates fall, refinancing will accelerate and you'll be forced to reinvest the money at a lower rate.

Interest from these bonds is free from federal income tax, as well as state tax in the state in which it's issued. Because of the favorable tax treatment, yields are generally lower than those of bonds that are federally taxable.

These bonds are issued by companies, and their credit risk ranges over the whole spectrum. Interest from these bonds is taxable at both the federal and state levels. Because these bonds aren't quite as safe as government bonds, their yields are generally higher.

A type of investment that pools shareholder money and invests it in a variety of securities. Each investor owns shares of the fund and can buy or sell these shares at any time. Mutual funds are typically more diversified, low-cost, and convenient than investing in individual securities, and they're professionally managed.

An investment with characteristics of both mutual funds and individual stocks. Many ETFs track an index, a commodity, or a basket of assets. Unlike mutual funds, ETFs can be traded throughout the day. ETFs often have lower expense ratios but must be purchased and sold through a broker, which means you may incur commissions.

Partner with a Vanguard advisor. If you'd like a professional to maintain your portfolio for you, we can do that. Research shows that an advisor who provides professional financial planning, coaching, and portfolio oversight can add meaningful value compared with the average investor experience.*

Bond funds are subject to interest rate risk, which is the chance bond prices overall will decline because of rising interest rates, and credit risk, which is the chance a bond issuer will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer's ability to make such payments will cause the price of that bond to decline.

While U.S. Treasury or government agency securities provide substantial protection against credit risk, they do not protect investors against price changes due to changing interest rates. The market values of government securities are not guaranteed and may fluctuate but these securities are guaranteed as to the timely payment of principal and interest.

Although the income from a municipal bond fund is exempt from federal tax, you may owe taxes on any capital gains realized through the fund's trading or through your own redemption of shares. For some investors, a portion of the fund's income may be subject to state and local taxes, as well as to the federal Alternative Minimum Tax.

Investments in stocks and bonds issued by non-U.S. companies are subject to risks including country/regional risk, which is the chance that political upheaval, financial troubles, or natural disasters will adversely affect the value of securities issued by companies in foreign countries or regions; and currency risk, which is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates.

Vanguard's advice services are provided by Vanguard Advisers, Inc. ("VAI"), a registered investment advisor, or by Vanguard National Trust Company ("VNTC"), a federally chartered, limited-purpose trust company.

The services provided to clients will vary based upon the service selected, including management, fees, eligibility, and access to an advisor. Find VAI's Form CRS and each program's advisory brochure here for an overview.

Surety bonds help small businesses win contracts by providing the customer with a guarantee that the work will be completed. Many public and private contracts require surety bonds, which are offered by surety companies. SBA guarantees surety bonds for certain surety companies, which allows the companies to offer surety bonds to small businesses that might not meet the criteria for other sureties.

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