GENERAL OBLIGATION BONDS

The two main forms of municipal bonds are general obligation and revenue.

These two types are distinguished according to whether they are secured or unsecured (these distinctions will be briefly discussed later).

General obligation bonds (GO bonds) are unsecured municipal bonds that finance municipal operations.

GO bonds have maturities of 10 years or more. The creditworthiness of the issuing city or state is the only "security" they provide. GO bonds finance projects that do not produce revenue.

The municipal issuer repays the bonds with funds raised by fees or property sales. If it is unable to, it may turn to taxation to guarantee interest and principal payments.

Generally, all the individual bonds in a GO bond issue have the same maturity date.

Revenue bonds are covered on the next screen.