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
Congress Approves Yet Another Short-Term Highway Funding Bill1 hour ago
Kansas Governor Uses Federal Aid to Help Offset $62.6 Million Budget Cuts1 hour ago
The Week in Public Finance: Pensions, Hedge Fund Sneakiness and Retirees25 minutes ago
In Post-Detroit Bankruptcy Era, California Protects Investors Before Pensioners16 hours ago
Los Angeles Now a Possibility for 2024 Olympics1 day ago
Arizona Tax Credit for Private Education Is Really Expensive1 day ago