Muni Bonds Go Green

The issuance of green muni bonds is a small part of the overall muni bond market, but the segment is growing. In 2012, $2 billion of green munis were issued, but that grew to $234 billion in 2020 and a projected $375 billion in 2021. Although green corporate bonds can be used for a variety of investments, green muni bonds are often used to fund clean power, water, and sewage systems. Green muni performance compared to regular muni bond is not clear as green bonds outperformed prior to 2019, but underperformed by a large margin in 2020. As with any muni bond, green muni bonds are a source of tax-free income.