Yield Burning


Yield burning is a form of financial fraud involving the United States municipal bond market.

Yield Burning

What is ‘Yield Burning’

The illegal practice of underwriters marking up the prices on bonds for the purpose of reducing the yield on the bond. This practice, referred to as “burning the yield,” is done after the bond is placed in escrow for an investor who is awaiting repayment.

Explaining ‘Yield Burning’

Yield burning is attempted in order to reduce the amount of tax that is incurred on fixed-income investments. However, this practice violates federal tax laws. It is not legally possible for an investor to earn a given yield on a fixed-income investment and use yield-burning activities to evade the full extent of the tax obligations incurred on that investment.

Further Reading

  • Economic, environmental, and social impacts of different sugarcane production systems – onlinelibrary.wiley.com [PDF]
  • The evergreen revolution: six ways to empower India's no-burn agricultural future – repository.cimmyt.org [PDF]
  • Estimating loss of ecosystem services due to paddy straw burning in North-west India – www.tandfonline.com [PDF]
  • Energy structure, energy policy, and economic sustainable development – www.sciencedirect.com [PDF]
  • Financial and economic suitability of agroforestry as an alternative to shifting cultivation: The case of the Chittagong Hill Tracts, Bangladesh – www.sciencedirect.com [PDF]
  • Foliar burn and wheat grain yield responses following topdress-applied nitrogen and sulfur fertilizers – www.tandfonline.com [PDF]
  • Technological choice, financial markets and economic development – www.sciencedirect.com [PDF]