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KIC000082 - Types and Features of Municlpal...

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Unformatted text preview: Types and Features of Municlpal Securltles (continued) 03° Tax-Backed Debt > The broadest type of tax-backed debt is general obligation debt. > An unlimited tax general obligation debt is the stronger form of general obligation pledge as it is secured by the issuer's unlimited taxing power. > A limited (a: general obligation debt is a limited tax pledge because for such debt there is a statutory limit on tax rates that the issuer may levy to service the debt. m n-mm imam lrr. 5ND: "mm m Types and Features of Municipal Securities (continued) ‘3‘ Tax-Backed Debt > Agencies or authorities of several statCS have issued bonds that carry a potential state liability for making up shortfalls in the issuing entity‘s obligation. f However, the state’s pledge is not binding. I Debt obligations with this nonbinding pledge of tax revenue are called moral obligation bonds. raw-um: JHIUMua-r mum-m in Muslim“; wmmmi Types and Features of Municipal Securities (continued) ‘3' Revenue Bonds 39 The second basic type of security structure is found in a revenue bond. > Such bonds are issued for either project or enterprise financing: in which the bond issuers pledge to the bondholders the revenues generated by the operating projects financed. For a revenue bond, the revenue of the enterprise is pledged to service 111: debt ofthe issue. The details of how revenue received by the enterprise will be disbursed are set forth in the trust indenture. bgfiét chunkI most ’cmchCl ll i a] i l i l ...
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