Private Purpose Bonds are to finance private investments, comparatively Public Purpose Bonds are to finance public amenities. In this article we compare both types of municipal bond including the tax regulations associated with them.
Taxable bonds are debt securities issued to investors that are subject to certain taxes which may include; local, state or even federal. The majority of bonds issued are subject to taxes, surprisingly enough the only that aren’t are tax-free or tax-exempt bonds which are occasionally issued by a municipality, therefore municipal bonds.
Private bonds are used to finance private projects rather than public bonds which are used to finance public operations and developments. In this article we explore the two types of bond and see how each compares with each other. We also look at how private purpose bond interest rates are calculated and how this differs from public purpose bond interest calculation.