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BNY Mellon US Municipal Infrastructure Debt Fund: An investment that investors could consider in turbulent markets

Interest rate hikes and geopolitical tensions have caused great market volatility. However, thanks to high credit ratings and low correlation with other asset classes, US municipal bonds could potentially offer investors a way to mitigate risk and sail through the current turbulent times.

US municipal infrastructure bonds are issued by US states, cities or local government bodies. Their history can be traced back more than a century when the first recorded US municipal bond was issued by the New York City government in 1812for the construction of a canal.

Today, the US municipal bond market has become a large and mature market that serves as a major source of funding to back public projects. There are currently 56,248 issuers on the market, representing almost US$4 trillion2 in lending, and supplying around 80% of the capital needed for US infrastructure maintenance and development. Some of the projects backed by such bonds concern airports, mass transit, water supply systems, power generation, electrical transmission and even colleges and hospitals.

Many states in the US are currently battling ageing infrastructure, and in response, the Biden administration rolled out a US$1.2 trillion3 infrastructure plan at the end of 2021 in order to build and renovate infrastructure facilities.