State and local governments issue general obligation (GO) municipal bonds and pay the interest and repay the principal from general revenues.
GO bonds considered somewhat less risky, and so pay slightly lower rates, than the same municipality's revenue bonds, which are backed by income from a specific project or agency.
A municipality's general revenues come from the taxes it is able to raise and money it can borrow. Those powers are sometimes described as its full faith and credit.
- Browse Related Terms: accrued interest, Bonds (Corporate), Coupon Rate, Debt, Full faith and credit, General obligation (GO) bond, Insured bond, Senior bond, Treasuries