water and sewer bond

Water and Sewer Bond

A municipal bond used to construct or expand a water and sewer lines for the municipality. The bond is secured by the revenue the utilities derive in the course of its operations; that is, the issuing municipality does not back the bond itself and the principal and interest are repaid from water bill collections. Generally speaking, a water and sewer bond (like all revenue bonds) is riskier than other municipal bonds because the water and sewer department has no power to tax. However, it is a fairly safe investment because most people will pay their water bills most of the time.

water and sewer bond

A revenue bond issued by a municipality to finance the building or extension of water and sewer systems. Interest and principal payments on the bond are derived from and are limited to revenues received from charges to the users of the systems.
References in periodicals archive ?
Public Finance, said, `As with other changes announced because of the Fitch municipal default study, more accurate ratings will help water and sewer bond issuers assume more appropriate borrowing costs and investors receive fair returns commensurate with risk.
municipal water and sewer bond sector, including that of the Boston Water and Sewer Commission (BWSC), whose rating was also upgraded to `AA-`.
CHICAGO -- Fitch Ratings has downgraded Pontiac, Michigan's (the city) water and sewer bonds as follows:
Fitch IBCA's recently published municipal default survey showed default rates of water and sewer bonds issued between 1979 and 1994 at 0.
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