Net Revenue Pledge


DEFINITION of 'Net Revenue Pledge'

A provision in a municipal bond issue that requires the issuing municipality to use net revenues (revenues left after expenses) from the project being financed to pay first the debt service costs of the issue.

BREAKING DOWN 'Net Revenue Pledge'

Similar to other restrictive provisions contained in bond indentures, a net revenue pledge serves to make the bond issue less risky for bondholders. Since the pledge effectively forces the government to use revenue from its debt-financed projects to pay debt service costs first, bondholders enjoy a reduced risk of default.

  1. Indenture

    A legal and binding contract between a bond issuer and the bondholders. ...
  2. Project Finance

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  3. Municipal Bond

    A debt security issued by a state, municipality or county to ...
  4. Revenue Bond

    A municipal bond supported by the revenue from a specific project, ...
  5. U.S. Savings Bonds

    A U.S. government savings bond that offers a fixed rate of interest ...
  6. Coupon

    The annual interest rate paid on a bond, expressed as a percentage ...
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