A general obligation (GO) bond is a type of municipal bond that is backed by the full faith and credit of the issuer, typically a state or local government. This means that the issuer is legally obligated to repay the bondholders from any and all sources of revenue, including property taxes and other taxes. GO bonds are typically used to finance capital projects such as roads, bridges, and schools.
GO bonds are considered to be one of the safest types of municipal bonds because of the strong credit backing from the issuer. However, because GO bonds are backed by the issuer's general revenue, they may be subject to budget cuts or other economic conditions that could impact the issuer's ability to repay the bonds.
How are revenue bonds secured?
Revenue bonds are secured by the revenue that is generated by the project that the bonds are financing. For example, if the bonds are financing a toll road, the revenue from the tolls would be used to secure the bonds. If the bonds are financing a parking garage, the revenue from the parking fees would be used to secure the bonds. Where are general obligation bonds recorded? General obligation bonds are typically recorded in the issuer's general ledger. In some cases, they may also be recorded in a separate bonds payable ledger. The specific details of the recording process will vary depending on the accounting system used by the issuer.
What do general obligation bonds pay for? General obligation bonds are a type of municipal bond that are backed by the full faith and credit of the issuing entity. This means that the issuing entity is pledging to use its best efforts to generate revenue to pay back bondholders. General obligation bonds are often used to finance capital projects, such as new construction or infrastructure improvements.
What are Gogo bonds?
Gogo bonds are a type of equipment finance lease that are commonly used in the aviation industry to finance the purchase of aircrafts and related equipment. The lessee (the party who is leasing the equipment) makes periodic payments to the lessor (the party who owns the equipment) over the term of the lease, and at the end of the lease, the lessee has the option to purchase the equipment for its residual value. Gogo bonds are typically issued by equipment manufacturers or leasing companies, and they are typically structured as private placement transactions. Do general obligation bonds settle in Fed funds? No, general obligation bonds do not settle in Fed funds. Instead, they settle in what is known as a "delivery versus payment" system, where the bond is delivered to the buyer on the settlement date and the buyer pays for the bond on the same day.