revenue bond

a bond issued, as by a municipal utility, to finance a specific project, the income from which will be used for repaying the bond. Cf. general-obligation bond.
[1855-60]

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or limited obligation bond

Bond issued by a municipality, state, or public agency authorized to build, acquire, or improve a revenue-producing property such as a waterworks, electric generating plant, or railroad.

Unlike general-obligation bonds, which are repaid through a variety of tax sources, revenue bonds are payable from specified revenues only, usually the revenues from the facility for which the bond was originally issued. Revenue bonds typically pay interest rates higher than those of general-obligation bonds. The separation of the revenue bond obligation from a municipality's other bond obligations allows the municipality to circumvent legislated debt limits.

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▪ government finance
also called  limited obligation bond 

       bond issued by a municipality, state, or public agency authorized to build, acquire, or improve a revenue-producing property such as a mass transit system, an electric generating plant, an airport, or a toll road. Unlike general obligation bonds, which carry the full faith and credit of the issuing agency and are repaid through a variety of tax revenues, revenue bonds are payable from specified revenues only, usually the revenues from the facility for which the bond was originally issued.

      This separation of the revenue bond obligation from a municipality's (municipality) direct and general bond obligations allows the municipality to circumvent legislated debt limits. Viewed in this light, revenue bonds can be considered a municipality's corporate bonds, since they are free of ceilings, pay interest (often at rates higher than general obligation bonds), and are paid only from the profits of a revenue-producing property. In exchange for this freedom from debt limitation, municipalities are scrutinized on their use of revenues generated by the sale of the bonds.

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Universalium. 2010.

Look at other dictionaries:

  • revenue bond — see bond 2 Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

  • Revenue bond — 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… …   Wikipedia

  • Revenue bond — A bond issued by a municipality to finance either a project or an enterprise where the issuer pledges to the bondholders the revenues generated by the operating projects financed, for instance, hospital revenue bonds and sewer revenue bonds. The… …   Financial and business terms

  • 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… …   Financial and business terms

  • revenue bond — noun a bond issued by an agency that is commissioned to finance public works; revenue from the public property is used to pay off the bond • Hypernyms: ↑bond, ↑bond certificate * * * noun : a bond issued by a public agency authorized to build,… …   Useful english dictionary

  • Revenue Bond — A municipal bond supported by the revenue from a specific project, such as a toll bridge, highway, or local stadium. This differs from general obligation bonds, which can be repaid through a variety of tax sources. Revenue bonds are only payable… …   Investment dictionary

  • revenue bond — noun Date: 1856 a bond issued by a public agency authorized to build, acquire, or improve a revenue producing property (as a toll road) and payable out of revenue derived from such property …   New Collegiate Dictionary

  • revenue bond — rev′enue bond n. ban bus a bond issued to finance a specific project, the income from which will be used for repaying the bond • Etymology: 1855–60 …   From formal English to slang

  • revenue bond — A bond issued by a public body payable solely from a special fund arising from the revenues accruing from operation of an enterprise or project for the construction, operation, and maintenance of which the bond was issued. 43 Am J1st Pub See § 8 …   Ballentine's law dictionary

  • revenue bond — Fin a bond that a government issues, to be repaid from the money made from the project financed with it …   The ultimate business dictionary

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