Moral Obligation Bond
A type of tax free revenue bond where government is not legally obligated to appropriate funds to pay a bond debt, but has great incentive to do so in order to avoid a default. For example, a housing authority may issue debt for a project but because property values fall, the projected revenue stream is not enough to make its payments to bond holders. In order to keep its good standing on Wall Street and low borrowing costs, the government overseeing such a housing authority is obligated to cover the debt payments through other funding mechanisms.
Join the Discussion
After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.
LATEST FINANCE HEADLINES
The Week in Public Finance: What Brexit Means for Muni Bonds, Pension Projections and More2 days ago
After Milestone Year of Recovery, State Spending to Slow4 days ago
How Many Sessions Does It Take to Get Alaska to Pass a Budget?5 days ago
Penny-Pinching Cripples Dam Safety in South Carolina6 days ago
Ferguson-Inspired Law Limits Court Fines in Missouri6 days ago
Budgetless With Bad Credit, Illinois Borrows for Roads6 days ago