Why are double-barrel bonds often considered safer?

Double-barrel bonds are considered safer primarily because they have a secondary source of income for repayment. This additional backing typically comes from two different sources, which can include both tax revenue from a local government and payments from a specific project or revenue-generating activity. This dual source of funding provides extra security to investors, as it reduces the risk associated with default; if one source of income fails to meet payment obligations, the other source can step in to fulfill those responsibilities.

The presence of this secondary income source makes double-barrel bonds appealing to investors looking for lower risk investment options, as they are less vulnerable to financial difficulties that might affect a single source. This heightened security can result in more favorable investment terms and conditions, contributing to their overall perception as a safer investment in the realm of municipal bonds.