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
Sports Betting Now Legal in New Jersey1 day ago
Why Texas May Tap Its Rainy Day Fund During Boom Times1 day ago
The Week in Public Finance: The Motherly Advice Edition4 days ago
Can Income Tax Cuts Boost a State's Economy?4 days ago
California Court Eliminates Hurdle to High-Speed Rail5 days ago
State Income Tax Revenue Is Increasingly Volatile6 days ago