DEFINITION of 'Hospital Revenue Bond'

A type of municipal bond to support the construction of new hospitals or new equipment and upgrades for existing hospitals. The revenue created by the hospitals is then used to pay back bondholders. Generally, bondholders are paid only after the expenses of running the hospital are paid, creating risk for bondholders if the hospital is not as profitable as anticipated. Income received from a hospital revenue bond may be exempt from state, local and/or federal taxation.

BREAKING DOWN 'Hospital Revenue Bond'

As their name suggests, revenue bonds are generally backed by the revenue that the specific project is able to generate. If this revenue is insufficient, municipalities have no obligation to use other funds to pay back bondholders. This means that revenue bonds typically command higher yields, since their default risk is greater than a general obligation bond. Ratings firms evaluate a revenue bond issue and assign a ranking indicating the probability that the obligation will be paid as scheduled.

RELATED TERMS
  1. American Callable Bond

    A bond that can be redeemed by the issuer at any time prior to ...
  2. Bond Resolution

    1. A document used with government bonds, especially general ...
  3. Revenue Bond

    A municipal bond supported by the revenue from a specific project, ...
  4. Municipal Bond

    A debt security issued by a state, municipality or county to ...
  5. Hospital Visitation Authorization

    A document that indicates who is allowed to visit a patient in ...
  6. Credentialing Liability

    Liabilities that a hospital or medical facility faces for the ...
Related Articles
  1. Investing

    Hospital Stocks' Fading Rally Reveals List of Ills

    Hospital stocks faded after jumping on the collapse of Trump's health care reforms, revealing a long list of ills that may hurt many hospital shares
  2. Investing

    Hospital Frustration With Valeant Grows

    The beleaguered pharmaceutical company promised discounted drugs to hospitals and has failed to deliver.
  3. Investing

    Revenue Cycle Management In Hospitals: Endless Opportunities

    Revenue cycle managment services are key to helping hospitals survive, and later thrive.
  4. Investing

    5 Hospital Stocks That Are Recession Proof (HCA, LPNT)

    Learn about five hospital stocks with the capacity to weather recession storms while offering steady, long-term growth opportunities.
  5. Investing

    How Corporate Events Affect Stock- And Bondholders

    Investors tend to buy either stocks or bonds, but rarely choose between the two. Find out when you'll benefit from one over the other.
  6. Investing

    Convertible Bonds

    A convertible bond is a bond the investor can exchange for a specific amount of company stock at a later date. It combines a bond and a call option. The bondholder can benefit if there's an increase ...
  7. Investing

    Consider These Municipal Bond ETFs

    Though relatively low-risk, there are still some factors to consider when taking the plunge into municipal bond ETFs.
  8. Investing

    5 Reasons to Invest in Municipal Bonds When the Fed Hikes Rates

    Discover five reasons why investing in municipal bonds after the Fed hikes interest rates, and not before, can be a great way to boost investment income.
  9. Investing

    How To Choose The Right Bond For You

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  10. Investing

    Municipal Bond Tips For The Series 7 Exam

    Learn to distinguish between general obligation and revenue bonds to ace this test.
RELATED FAQS
  1. Who or what is backing municipal bonds?

    Learn about the basics of municipal bonds, including the various revenue sources that are utilized to back or secure municipal ... Read Answer >>
  2. How do I use a premium put convertible?

    Holders of convertible bonds face all the pitfalls that traditional bondholders face - liquidity risk, interest rate risk ... Read Answer >>
  3. What is a convertible bond?

    A convertible bond is a bond issued by a corporation that, unlike a regular bond, gives the bondholder the option to trade ... Read Answer >>
  4. In the context of a bond, what does the principal refer to?

    Get introduced to the world of bond investing and learn what the term "principal" means in reference to a corporate or government ... Read Answer >>
  5. How do the returns on municipal bonds compare to those of other bonds?

    Learn how tax-free municipal bonds may provide better returns than other types of bonds, and understand the risks of municipal ... Read Answer >>
  6. What are the risks of investing in a bond?

    The most well-known risk in the bond market is interest rate risk - the risk that bond prices will fall as interest rates ... Read Answer >>
Hot Definitions
  1. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
  2. Index

    A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is a hypothetical ...
  3. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
  4. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding shares. The majority shareholder is often the founder ...
  5. Competitive Advantage

    An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers ...
  6. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities ...
Trading Center