What is a New Jersey Independent Authority Moral Obligation bond?
Certain New Jersey Independent Authorities (for example the Higher Education Student Assistance Authority, Housing and Mortgage Finance Agency and the South Jersey Port Corporation), may issue bonds that are secured primarily by payments or revenues received by the Independent Authority and which are further supported by authorizing legislation that requires a designated official of the Independent Authority to request an appropriation from the State to replenish the debt service reserve fund (or part of such fund ) relating to the bonds to the extent the debt service reserve fund has been used to make a scheduled debt service payment on the bonds. Bonds issued pursuant to this type of authorizing legislation are referred to as Moral Obligation bonds. Any request for funds to replenish the debt service reserve fund is subject to appropriation by the New Jersey State Legislature, which has no legal obligation to make such appropriations. Moral Obligation bonds are not general obligation
