A revenue bond is a type of municipal bond issued by government entities to finance public projects or facilities. These bonds are backed by the revenue generated by the specific project they fund, such as tolls, fees, or other income sources. The income generated by the project is used to repay the bondholders. Revenue bonds are commonly used to finance projects like infrastructure improvements, transportation systems, utilities, or public facilities. Unlike general obligation bonds, revenue bonds are not backed by the government’s taxing authority but rather by the project’s income stream.
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