Do Puerto Rico and other U.S. territories issue state bonds?
Only the 50 states may issue state bonds. Any issuing authority such as Puerto Rico may issue general obligation bonds and revenue bonds. These bonds may be tax exempt, but they are not state bonds. Do state bonds have a federal guarantee? State bonds do not have a federal guarantee. The full faith and credit of the state is the strongest credit rating of every state’s bond issue. The federal government no longer issues bonds through state auspices that carry federal guarantees and have exemption from income taxes. How are state bonds rated? The three major rating agencies–Moody’s, Standard and Poor’s, and Fitch–rate state municipal issuance for a fee. The rating rests upon the strength of the individual state’s finances. Are state bonds exempt from all city and local taxes? This is a matter left to the individual states to decide for themselves. Some states allow only some state bonds to be tax exempt at the city and local level. Some states do not allow any further tax deduction be
