While the current interest rate environment is far more hospitable to producing substantially higher investment income for longer periods of time, those higher rates come with other, undesirable consequences.  In this case, the good far outweighs the bad.

Rising interest rates on investments are most certainly welcome for communities investing bond proceeds.  However, as is the case with most good things, a new set of challenges are introduced.  For issuers of tax-exempt bonds, these challenges can largely be summed up in a single word: arbitrage.

To say a lot has changed in the bond market this year would be a major understatement”¦changes that can largely be attributed to the actions taken by the Federal Reserve to combat persistent inflation.