A general obligation bond typically refers to a bond issued by a state or local government in which interest is paid and principal is repaid from the issuer’s general funds. Most general obligation bonds are backed by the “full faith and credit” (and in many cases the taxing power) of the issuer.

A revenue bond typically refers to a bond in which interest is paid and principal is repaid from a specific source of revenue pledged to the bond. For example, a bond issued by a municipal water and sewer authority would typically involve revenues obtained through local water and sewer assessments. In another example, a government might issue bonds on behalf of a private entity or 501c3. In this case, interest is paid and principal is repaid exclusively from revenues pledged by the entity receiving financing.

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