What is the difference between a general obligation (GO) bond and a revenue bond?
A general obligation bond is a debt instrument issued for the acquisition of a capital project. This type of bond is repaid by the issuing government body typically from sales taxes at the state level and property taxes at the local level. Since the full faith and credit of state and/or municipality is at stake, the probability of default is extremely low. This is “full-faith and credit debt” meaning that the jurisdiction’s tax resources are pledged for the repayment of principal and interest. GO debt requires bond counsel blessing during the underwriting process and is considered to be one of the most secure types of debt. However, obtaining GO debt is not easy since voters must agree to it by referendum. The University does not issue GO bonds based on the fact that we are not a government body collecting a pledgeable tax base. A revenue bond is a debt instrument used to finance projects from which a portion of the projects revenues are set aside to pay back the loan. An example of th
