MUNICIPAL NOTES AND BONDS

Municipal Notes and Bonds* are debt obligations of state or local governments, their political subdivisions, agencies, and authorities. Municipal Notes and Bonds represent the issuer's promise to pay a specified rate of interest on the principal amount of the security until its maturity and to pay the principal at a specified future date. Municipal securities consist of both long and short-term issues.

Terms and Structures

• Maturity
  Municipal notes are usually issued for periods of three months to one year. Municipal bonds are issued for periods from one year to 40 years.
• Issued
  New issues of municipal securities are sold weekly to groups of dealers (syndicates), which bid competitively for the issues against other syndicates. Seasoned issues are also available on any business day in the secondary market. Should you decide to sell your municipal security prior to its maturity, the price will vary with market conditions and interest rates.
• Form
  Most municipal securities are now issued in registered form. Other issuers elect to issue in book entry form only. Both may be held in Wachovia's Institutional Trust Services Custody Department.
• Quoted
  Municipal securities are quoted on a yield to maturity basis.
• Rate Structure
  Quoted yields on municipal securities tend to be lower than on taxable securities because of the tax advantages of municipal securities. However, for individuals and institutions in sufficiently high tax brackets, the taxable equivalent yield on municipal securities is generally much higher than on fully taxable securities.
• Denominations
  The standard denomination for Municipal Notes is $100,000, and for Municipal Bonds $5,000.
• Security
  General Obligation bonds are secured by the full faith, credit, and taxing power of the issuer. Revenue bonds are secured by the full pledge of specific revenues, such as water and sewer revenues, airport revenues, or stadium revenues.
• Tax Status
  Tax-exempt municipals are exempt from federal Income taxes, with the possible exception of alternative minimum tax. Tax-exempt bonds are generally exempt from income taxes in the state in which they are issued.

Corporate & Institutional Customer Service