Bond Resolution

DEFINITION of 'Bond Resolution'

1. A document used with government bonds, especially general obligation bonds, to allow bonds to be issued and sold for a specific purpose and to define the rights and responsibilities of each party to a bond contract (the issuer and the bondholder). The bonds represent money loaned and entitle the holder to interest payments and the return of principal.

2. A ballot measure that allows voters to approve or deny the issuance and sale of new bonds for a stated purpose. This type of bond resolution should describe the nature and location of the project to be financed and the project's maximum potential cost.

BREAKING DOWN 'Bond Resolution'

1. A bond resolution describes how much interest and principal will be paid to bondholders and when, how payments will be made, how bonds may be redeemed and what happens in the event of default. It also describes how the bond funds may be used. Sometimes, such as with revenue bonds, a bond indenture is used instead of a bond resolution to define the legal terms of the bond issue and its financing.

2. For example, a bond resolution might authorize a municipality to issue $10 million in revenue bonds to build a new school.

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