REVENUE BOND Meaning and
Definition
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A revenue bond is a type of municipal bond issued by government entities or special purpose authorities to finance specific projects that are expected to generate revenue, such as toll roads, bridges, airports, water treatment plants, or power plants. It is a form of long-term debt that allows the issuer to fund these projects through the future revenue they are anticipated to generate, rather than relying on general tax revenues.
The key characteristic of a revenue bond is that the principal and interest payments are repaid exclusively from the earnings or revenues generated by the project it finances. As a result, the creditworthiness of the issuer is typically evaluated based on the projected revenue stream from the specific project, rather than its overall financial position. This means that the success and profitability of the underlying project is crucial for the issuer's ability to repay the bondholders.
Revenue bonds generally offer higher yields than general obligation bonds, which are backed by the full faith and credit of the issuer's taxing authority. However, they are also considered to carry a higher level of risk due to their dependency on the success of the revenue-generating project. Consequently, revenue bonds are often considered suitable for risk-seeking investors who are willing to accept the potential volatility associated with these types of investments.
In summary, a revenue bond is a type of municipal bond issued to finance specific projects that are expected to generate revenue. The repayment of the bond is solely dependent on the success and profitability of the project, rather than general tax revenues.
Common Misspellings for REVENUE BOND
- eevenue bond
- devenue bond
- fevenue bond
- tevenue bond
- 5evenue bond
- 4evenue bond
- rwvenue bond
- rsvenue bond
- rdvenue bond
- rrvenue bond
- r4venue bond
- r3venue bond
- recenue bond
- rebenue bond
- regenue bond
- refenue bond
- revwnue bond
- revsnue bond
- revdnue bond
Etymology of REVENUE BOND
The word "revenue bond" is a compound term derived from two separate words: "revenue" and "bond".
1. Revenue: The term "revenue" originates from the Middle English word "revenue", which, in turn, comes from Old French "revenue". It was used to denote income or return from land, property, or investments. The word "revenue" can be traced back to the Latin word "revenire", which means "to come back" or "to return".
2. Bond: The term "bond" has a different etymology. It comes from the Old English word "bonda", meaning "householder" or "freeholder". Over time, its meaning evolved, and by the 14th century, it began to refer to a legal obligation or written pledge.
Idioms with the word REVENUE BOND
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Airport Revenue Bond
An "Airport Revenue Bond" refers to a type of municipal bond issued by an airport authority to finance airport infrastructure projects. These bonds are repayable using the revenue generated by the airport, such as parking fees, rental fees from airlines and concessionaires, and other related sources. This borrowing mechanism allows airports to raise funds for expansions, renovations, or construction while leveraging the projected future revenues.
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