Question

How does credit analysis differ between municipal issuers and corporate issuers?

Answer 1

Credit analysis is different between the municipal issuers and corporate issuer because-

A. Municipal organisations are having the benefit of being backed by the state whereas corporate instruments does not have the backing and they are not risk free

B. Corporate instruments are also taxable with high rate whereas Municipal instruments are tax free from the federal structure tax

C. the credit rating of the Municipal instruments are generally very high and credit rating of the corporate issue is lower

D. There is risk-free status associated with the municipal bonds and very low rate of yield whereas there is no risk free stasis associated with the corporate issue

Hence, credit analysis is different for Municipal instruments and credit instruments.