There are three main classes of long-term munis:
- General obligation (GO) bonds are secured by the full faith, credit and taxing power of the issuer.
- Revenue bonds are secured by the full pledge of specific revenues, such as revenue from water bills, airport gate charges or turnpike tolls.
- Industrial development revenue bonds (IDRBs) are issued through a local governmental agency on behalf of a private business, and proceeds are intended to build or acquire factories or factory tools, which have the effect of improving the employment prospects in the local area. The debt service on the bonds is paid solely by the company.
GO and revenue bonds are used much more often than the highly specialized IDRBs. All levels of municipal government use revenue bonds, but only states, counties, cities and school districts put their full faith and credit behind GOs.
|Issuer||Types of Debt Generally Issued|
|State governments||GO and revenue|
|Cities||GO and revenue|
|Counties||GO and revenue|
|Public school districts||GO and revenue|
|Colleges and universities||GO and revenue|
|Public power authorities||Revenue|
|Student loan agencies||Revenue|
|Waste disposal districts||Revenue|
|Source: Federal Reserve Bank of
Short Term Munis
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