Revenue bond

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Related to Revenue bond: Municipal revenue bond

Revenue bond

A bond issued by a municipality to finance either a project or an enterprise in which the issuer pledges to the bondholders the revenues generated by the operation of the projects financed. Examples are hospital revenue bonds and sewer revenue bonds.

Revenue Bond

A municipal bond that is not secured by the issuer's general revenue but instead by the revenue of the project it intends to finance. For example, a city may issue a revenue bond to finance improvements to the local sewer system. It expects to be able to pay back the bond with money raised from citizens' water bills. Generally speaking, a revenue bond is riskier than other municipal bonds because the project has no power to tax on its own. However, it is usually a fairly safe investment. See also: Authority Bond.

revenue bond

A municipal debt on which the payment of interest and principal depends on revenues from the particular asset that the bond issue is used to finance. Examples of such projects are toll roads and bridges, housing developments, and airport expansions. Revenue bonds are generally considered of lower quality than general obligation bonds, but there is a great amount of variance in risk depending on the particular assets financed. Compare authority bond.

Revenue bond.

Revenue bonds are municipal bonds issued to finance public projects, such as airports and roadways. The bonds are backed by revenue to be generated by the project.

For example, if the construction of a tunnel is financed with municipal revenue bonds, the tolls paid by motorists are used to pay back the bondholders. However, bondholders usually have no claims on the bond issuer's other assets or resources.

References in periodicals archive ?
40,400,000 Student Loan Revenue Bonds, Taxable Senior Series 2007A-2, 'AAA';
New York City Sales Tax Asset Receivable Corporation (STAR) sales tax asset revenue bonds upgraded to 'AA-' from 'A+';
44,850,000 Dormitory Authority of the State of New York taxable periodic auction reset securities (PARS) Mercy Medical Center revenue bonds, series 1999B (Insured by MBIA);
Etowah Gadsden Health Care Authority (AL), $4,705,000 (Etowah County Health Department Project) revenue bonds series 2007 (insured: FSA)
Carlsbad Public Financing Authority (CA), $18,540,000 (Carlsbad Municipal Golf Course Project) revenue bonds series 2006A (insured: Ambac Assurance Corp.
variable-rate demand revenue bonds series 2006 (LOC: Bank of New York (The)) 'AA-/F1+';
67,700,000 insured health facility revenue bonds auction-rate securities, series 2005C (insured: Ambac);
18,995,000 Delaware Health Facilities Authority (DE) (Catholic Health East) revenue bonds, series 2003D;
29,855,000 hospital revenue bonds, series 1991A (Adventist Health System/Sunbelt, Inc.
159,235,000 Arizona Health Facilities Authority revenue bonds (Banner Health) series 2005B (weekly rate securities) (insured: Financial Guaranty Insurance Company) (liquidity facility: Bank of Nova Scotia);
4 million Montgomery County, Ohio revenue bonds (Catholic Health Initiatives), series 2004A;
28,020,000 revenue bonds (Charity Obligated Group), series 1999D.