Private Activity Bond - PAB
What Does Private Activity Bond - PAB Mean?
Tax-exempt bonds issued by or on behalf of local or state government for the purpose of providing special financing benefits for qualified projects. The financing is most often for projects of a private user, and the government generally does not pledge its credit.
Investopedia explains Private Activity Bond - PAB
These bonds are used to attract private investment for projects that have some public benefit. (There are strict rules as to which projects qualify.) This type of a bond results in reduced financing costs because of the exception of federal tax.
Related Links
- Bond Basics Tutorial - Investing in bonds - What are they, and do they belong in your portfolio?
- Advanced Bond Concepts - Learn the complex concepts and calculations for trading bonds including bond pricing, yield, term structure of interest rates and duration.
- The Basics Of Municipal Bonds - Investing in these bonds may offer a tax-free income stream but they are not without risks.
