General obligation

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General Obligation Bond

In the United States, a municipal bond in which the issuing locality pledges to use all revenues at its disposal to pay bondholders, including the raising of property taxes. Should a sufficient number of residents not pay their property taxes that it impacts revenue for bondholders, the terms of the bond legally require the municipality to raise property taxes to make up the shortfall. There are two basic types of general obligation bonds. A limited GO allows for the raising of property taxes up to a certain percentage, while an unlimited GO theoretically allows the municipality to levy taxes of up to 100% of a property's value. Because an unlimited GO provides a great incentive to pay property tax on time, and because many states only allow such a bond to be issued following a vote on the matter, credit ratings agencies usually rate them higher. However, both types of GO are generally rated highly.
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General obligation (GO) bond.

State and local governments issue general obligation (GO) municipal bonds and pay the interest and repay the principal from general revenues.

GO bonds are considered somewhat less risky th, and so pay slightly lower rates,an the same municipality's revenue bonds, which are backed by income from a specific project or agency.

A municipality's general revenues come from the taxes it is able to raise and money it can borrow. Those powers are sometimes described as its full faith and credit.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Public engagement was the center of Denver's general obligation bond process, so the second challenge in planning for the GO bond was developing a way for every stakeholder --from the public to city council to city agencies--to provide input on the capital projects at every step of the process that should be included in the final bond package.
Once the district's building program is complete, which management expects by fiscal 2025 at the latest, the district expects to use a mixture of pay-as-you-go and GO bond funding for future capital improvement projects.
GO bond's tax-exempt status and low risk, due to the fact that they are backed by the full faith and credit of the issuer, makes them very appealing to investors.
Proceeds will be used to refinance outstanding GO bond anticipation notes and pay for the cost of various city capital projects.
M2 EQUITYBITES-October 18, 2010--S&P hikes Pelham GO bond rating to A(C)2010 M2 COMMUNICATIONS
BANKING AND CREDIT NEWS-August 18, 2010--S&P ups Yavapai County Community College District's GO bond SPUR to AA-(C)2010 M2 COMMUNICATIONS