Revenue Bonds Vs General Obligation Bonds

The two types of municipal bonds are general obligation bonds and revenue bonds.

Revenue bonds vs general obligation bonds. Revenue bonds are financed by the income generating facilities that the bonds are for. The primary difference between the two is in how those payments are financed. An in depth look at general obligation and revenue bonds. The limited tax go bond and the unlimited tax go.

A revenue bond could be issued for for example the drilling of an oil site. Essential services bonds within the revenue bond category there are also essential services revenue bonds which include projects related to water sewer and power systems. General obligation bonds or gos are municipal bonds that are financed by the municipal tax revenue. Revenue bonds which are also called municipal revenue bonds differ from general obligation bonds go bonds that can be repaid through a variety of tax sources.

The difference between them lies in how the government issuer secures the money to repay the bondholders. However as stated above go bonds allow using both revenue sources. Join other individual investors receiving free personalized market updates and research. General obligation bonds and revenue bonds are two types of bonds issued by municipalities such as cities.

Both types of bonds promise regular interest payments to investors along with a return of principal at maturity. Revenue bonds are generally of higher risk than general obligation bonds and as a result they typically offer higher yields. A general obligation bond could be for the funding of low income housing or schools. General obligation and revenue bonds differ in the sources of cash flows that will be responsible for repaying the investors who provide the capital to issue the bonds.

There are two types of general obligation bonds. Gos have debt limits to protect taxpayers from higher taxes. Types of general obligation bonds.