DEFINITION of 'Authority Bond'

A debt security issued by an authority, such as a corporate or government agency, for purposes of financing the operations of a revenue-generating public business. Investors in authority bonds have a claim to the business's revenues, which serve as the bond's yield.

BREAKING DOWN 'Authority Bond'

An authority bond is very similar to a municipal bond. Both are issued by an authoritative group, but the projects will typically be of differing natures. Additionally, authority bonds can incorporate margin protections, providing some insurance for the holders.

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