Revenue Bonds Vs Go

Revenue bonds are financed by the income generating facilities that the bonds are for.

Revenue bonds vs go. Generally speaking there are two categories of municipal bonds. Unlike gos which rely on taxation revenue bonds are guaranteed by the specific revenues generated by the issuer. A revenue bond mean anything. General obligation or go bonds are backed by the general revenue of the issuing municipality while revenue bonds are supported by a specific revenue source such as income from a toll road hospital or higher education system.

Both go bonds and revenue bonds are generally safe investments although go bonds are typically considered to be safer than revenue bonds. 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. While a revenue bond is backed by a specific revenue stream holders of go bonds are relying on the full faith and credit of the issuing municipality. Local municipalities such as counties cities and towns will issue two basic types of bonds that allow them to fund infrastructure projects.

A revenue bond could be issued for for example the drilling of an oil site. In a small community like that does the fact that it s a go vs. These bonds finance revenue producing projects such as industrial parks toll roads. Typically since holders of revenue bonds can.

What happens when revenue bonds default. General obligation bonds or gos are municipal bonds that are financed by the municipal tax revenue. A general obligation go bond pledges the full faith and credit of the issurer to repayment. The most common issuers of revenue bonds are.

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. Revenue bonds are repaid from the revenues generated by the project the bonds financed. While general order bonds provide for the essential funding of local government and have a low risk of the issuer not paying off its. 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.

Municipal bonds generally can be classified into two camps general obligation bonds and revenue bonds. A municipality can always issue more bonds or raise taxes to pay off a go issue while a revenue bond is restricted to a single revenue stream.