Hospital Revenue Bond

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. Bondholder

    The owner of a government or corporate bond. Being a bondholder ...
  2. Revenue Bond

    A municipal bond supported by the revenue from a specific project, ...
  3. Put Provision

    A condition that allows a bondholder to resell a bond back to ...
  4. Channeling

    A commercial insurance policy which insures employees and affiliated ...
  5. Net Revenue Pledge

    A provision in a municipal bond issue that requires the issuing ...
  6. Bond Resolution

    1. A document used with government bonds, especially general ...
Related Articles
  1. Technical Indicators

    Key Financial Ratios to Analyze the Hospitality Industry

    Understand the hospitality industry and the types of companies that operate within it. Learn about key financial ratios used to analyze the industry.
  2. Professionals

    Municipal Bonds

    FINRA Series 6 Exam Study Guide - Municipal Bonds. In this section Types of Municipal Bonds: 1) General Obligation 2) Revenue Bonds.
  3. Professionals

    Debt Securities/Bonds

    Many different types of entities issue bonds in an effort to raise working capital. Corporations, and municipalities, along with the United States Government and US Government agencies, all issues ...
  4. Stock Analysis

    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. Bonds & Fixed Income

    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 ...
  6. Bonds & Fixed Income

    Corporate High-Yield Bonds vs. Equities

    Equities and corporate bonds often play a significant role regarding the diversification of an investor's portfolio. We put both asset classes in contrast.
  7. Markets

    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.
  8. Professionals

    Introduction to Health Care Insurance

    Introduction to Health Care Insurance
  9. Professionals

    Corporate Bonds

    FINRA Series 6 Exam Study Guide - Corporate Bonds. This section discusses corporate bonds in greater detail. Different types of corporate debt: secured, unsecured, junk and convertible bonds ...
  10. Mutual Funds & ETFs

    Why Muni Bonds and Bond Funds are Perfect Together

    Municipal bonds and bond funds differ in several ways, which is partly why they complement each other well.
RELATED FAQS
  1. What do cities do with the funds generated from municipal bonds?

    Learn more about municipal bonds, including the various types of bonds issued and the purposes of municipal bond funds, such ... Read Answer >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  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. 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 >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center