The paper focuses on the objectives local governments want to achieve when issuing municipal bonds. These are typically used to finance long-term projects within the bounds of the given local government's credit ability. The author describes the legally acceptable levels of local government debt. Next, she describes municipal bonds as a type of security and classifies them according to various criteria.

The paper then proceeds to describe the two methods to issue municipal bonds, a closed issue and a public subscription, in the latter case the bonds being admissible for public trading. The comparison identifies the issue method which is more financially attractive to the local government.

Finally, the author compares the financial cost of servicing municipal bonds targeted at no more than 300 individuals with the cost of servicing a bank loan. The comparison leads to the conclusion that it is more expensive to launch municipal bonds than to service a bank loan.

The author therefore concludes that municipal bonds are not a particularly effective capital market instrument from the point of view of local governments. They are, however, an important tool of promoting the municipality, often used by local government units to attract domestic and foreign investors.