What is a Combination Bond?
Combination bonds are bond issues that derive their financial backing from more than one source. Often, this will include revenue that is generated by the issuing entity as well as revenue that is generated by a pre-existing source or a mechanism that is put in place at the same time as the issue of the bond. The combination bond is a popular format for the issue of municipal bonds. The concept of the double barrel or combination bond has been around for a number of years. Part of the reason for the popularity of the bond is that it offers a higher guarantee of protection for investors. Municipal bonds of other types are either backed with the promise of the issuer, or with some type of plan to generate revenue during the life of the bond that will make it possible to honor the bond at maturity. The combination bond uses both these approaches and thus represents a lower risk for the investor. One aspect of the combination bond may be the secondary source of the funding for the bond iss
” Combination bonds are bond issues that derive their financial backing from more than one source. Often, this will include revenue that is generated by the issuing entity as well as revenue that is generated by a pre-existing source or a mechanism that is put in place at the same time as the issue of the bond. The combination bond is a popular format for the issue of municipal bonds. . The concept of the double barrel or combination bond has been around for a number of years. Part of the reason for the popularity of the bond is that it offers a higher guarantee of protection for investors.
