A revenue bond is a special type of municipal bond distinguished by its guarantee of repayment solely from revenues generated by a specified revenue-generating entity associated with the purpose of the bonds, rather than from a tax. Unlike general obligation bonds, only the revenues specified in the legal contract between the bond holder and bond issuer are required to be used for repayment of the principal and interest of the bonds; other revenues (notably tax revenues) and the general credit of the issuing agency are not so encumbered. Because the pledge of security is not as great as that of general obligation bonds, revenue bonds may carry a slightly higher interest rate than G.O. bonds; however, they are usually considered the second-most secure type of municipal bonds.
Read more about Revenue Bond: Purpose, Law in The United States
Famous quotes containing the words revenue and/or bond:
“If you tax too high, the revenue will yield nothing.”
—Ralph Waldo Emerson (1803–1882)
“When the bond of love broke,
the respect born of affection withered,
good feelings fled,
and that man walked before me
like any other,
Good Friend,
I imagine all this,
think on days gone by
and wonder why
my heart hasn’t cracked
into a hundred bits.”
—Amaru (c. seventh century A.D.)