revenue bond

Revenue Bond

A municipal bond supported by the revenue from a specific project, such as a toll bridge, highway, or local stadium.

Notes:

This differs from general-obligation bonds, which can be repaid through a variety of tax sources. Revenue bonds are only payable from specified revenues.

A main reason for using revenue bonds is that they allow the municipality to avoid reaching legislated debt limits.

See also: Bond, Mello Roo's, MOB (Municipals-over-Bonds) Spread, Municipal Bond, Municipal Bond Fund, Private Purpose Bond

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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.

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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.