Net Revenue Pledge

Net Revenue Pledge

A provision in some municipal bonds requiring the issuer to use the revenue the bond raises after expenses to pay for the debt service. For example, if a bond issue raises $10 million, but the project it intends to finance only costs $8 million, a net revenue pledge would require the issuer to use the remaining $2 million to service the debt from the bond. A net revenue pledge exists in order to make the municipal bond less risky for investors; a bond indenture that contains a net revenue pledge is more likely receive a higher credit rating than one that does not have one.
References in periodicals archive ?
The rating reflects a net revenue pledge and the following credit strengths:
The PFC airport system revenue bonds are secured primarily by pledged portions of PFC revenues as well as a backup subordinate net revenue pledge.
In addition to the net revenue pledge, MID will enter into a $50 million standby purchase agreement with Morgan Guaranty.
The CP notes are secured by proceeds of note or bond sales, amounts in certain funds and a pledge of net revenues of the system subordinate to the net revenue pledge for the system's revenue priority obligations.
The long-term 'AA' rating for the bonds continues to be based on the net revenue pledge of the City of Colorado Springs, Colorado utilities system.
Bonds are secured by a net revenue pledge of the Wind Project System, which consists of three phases.
The long-term 'AA' rating on the 2012A bonds is based on the net revenue pledge of the city's combined utilities system, and reflects the system's diverse revenue stream with four major business segments (electric, natural gas, water and wastewater), competitive retail sales, consistent financial performance, relatively low-cost power supply mix, and diverse customer base.
For the consolidated system revenue/refunding bonds, the bonds are secured by a net revenue pledge of the consolidated systems, which includes the electric distribution, water, wastewater and fiber optics systems, and the Lake Chelan hydroelectric project.
The first-lien revenue bonds are secured by the net revenue pledge of all of the port's revenues, including the airport, seaport, and real estate divisions.
The long-term 'AA' rating continues to be based on the net revenue pledge of the City of Colorado Springs, Colorado's combined utilities system (rated 'AA', Stable Outlook).
The bonds are secured by a net revenue pledge (after payment of operating and maintenance expenses) of the combined utilities system and are on parity with outstanding utility system revenue bonds.
The senior lien wastewater revenue bonds are secured by a net revenue pledge of the wastewater system.