Revenue Bonds Can Be Backed By

Most revenue bonds are backed by a net or gross pledge on the enterprise s revenue.

Revenue bonds can be backed by. As their name suggests revenue bonds are generally backed by the revenue that the specific project can generate. Debt limits do not apply to self supporting debt such as revenue bonds or industrial revenue bonds. If this revenue is insufficient municipalities have no obligation to use other. Municipalities impose debt ceilings on the dollar amount of bonds that can be issued backed by ad valorem taxing power g o.

Revenue bonds that finance income producing. These bonds finance revenue producing projects such as industrial parks toll roads convention centers. A net pledge is a pledge of revenues after the enterprise pays for operating and other expenses. Revenue bonds are another type of muni bond that is backed by the revenue generated by a specific project being financed by the bond issue.

General obligation bonds aren t tied to a specific revenue generating project. Revenue bonds are backed by the full revenue of the municipality. In other words the money raised by the bond offering directly finances the project and the project once complete generates the revenues to pay back the interest and principal on the bonds to investors. Rather they re backed by the full faith and credit of the municipality that issues them.

Revenue bonds are repaid from the revenues generated by the project the bonds financed. A gross pledge is a stronger pledge because it is a pledge on revenues before operating or other expenses.