How to Sell Municipal Bonds

Municipal bonds, which are debt securities used by state and local governments to raise money for specific programs, represent one of the largest of all security markets. "Munis," as they are often called, are very attractive to investors because they are usually tax-exempt. Because of their popularity, selling your municipal bonds should be fairly easy to do.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Bond broker or dealer registered with the Municipal Securities Rulemaking Board (MSRB)
• Municipal bonds

1. Sell your municipal bonds on the over-the-counter (OTC) market using a bond broker or dealer, which is the most common way to buy and sell in this arena. Use a securities dealer who is registered with the Municipal Securities Rulemaking Board (MSRB) in order to ensure a smooth transaction. The broker-dealer will then put your bonds up on the OTC market and wait for the highest bidder.
2. Keep track of current interest rates in order to maximize your profits from selling municipal bonds. When interest rates are high, the value of municipal bonds goes down, and when they fall, the value of municipal bonds rises.
3. Check the prospective you received when you purchased the municipal bonds and be aware of any type of one-time sales charge you might incur when selling, especially if this is a mutual fund that is connected to a municipal bond. These charges might incur as much as an additional 4 percent fee when you sell the bond.
4. Consider swapping municipal bonds as opposed to just cashing them out. By trading one municipal bond for another, you may be able to take advantage of certain tax breaks, potentially reduce the amounts of fees and commissions you may have to pay and get into a bond that may have a higher yield than the previous one.
5. Use online resources such as the Investing In Bonds website in order to track daily information on municipal bonds, such as daily yields and prices (see Resources below). Usually, this information is available free of charge.

Tips & Warnings

• Since municipal bonds are traded so easily on the over-the-counter market, fees and commissions are usually less than with other types of bonds. These commissions usually range from 1/2 a percent to 3 percent of the value of the bond, compared to the 1 percent to 4 percent charged for stocks and other types of bonds.