General Obligation (GO) Bond
A municipal bond backed by the issuer's full faith, credit, and taxing power.
What is General Obligation (GO) Bond?
Repaid from general tax revenue. Because it pledges taxpayers' money, a GO issue typically needs voter approval. Credit analysis focuses on the tax base, debt per capita, and the local economy.
General Obligation (GO) Bond: a worked example
A city issues GO bonds to build schools, repaid from property taxes.
What is the difference between General Obligation (GO) Bond and Revenue Bond?
GO = backed by taxes, usually needs voter approval. Revenue = backed only by the project's income, no voter approval, feasibility study instead.
Often confused with Revenue Bond - see General Obligation (GO) Bond vs Revenue Bond side by side.
More terms in Bonds & Cash Equivalents
Certificate of Deposit (CD)
A bank time deposit paying a fixed rate for a fixed term, FDIC insured.
Commercial Paper
Unsecured short-term corporate debt, 270 days or less.
Treasury Inflation-Protected Securities (TIPS)
Treasuries whose principal adjusts with the CPI.
Zero-Coupon Bond
Sold at a deep discount, pays no interest, matures at par.
Asset-Backed Securities (ABS / MBS)
Bonds backed by pools of loans - mortgages, auto loans, credit cards.
Revenue Bond
A municipal bond repaid only from the revenue of a specific project.
Insured Municipal Bond
A muni with third-party insurance guaranteeing principal and interest.
Municipal Bond Tax Treatment
Interest usually federally tax-free; gains are not.