BROWSE

Obligation Bond

What is 'Obligation Bond'

A municipal bond used to secure a mortgage on property or other physical assets that can be liquidated. The face value of the bond is greater than the value of the property itself.

Explaining 'Obligation Bond'

An obligation bond creates a personal obligation on the part of the borrower to compensate the lender for costs in excess of the value of the mortgaged property or assets, such as closing costs or transaction costs.


Further Reading


Comparative costs of negotiated versus competitive bond sales: new evidence from state general obligation bonds
www.sciencedirect.com [PDF]
Financial assurance rules, also known as financial responsibility or bonding requirements, foster cost internalization by requiring potential polluters to demonstrate the financial resources necessary to compensate for environmental damage that may arise in the future …

Tax increment financing, economic development professionals and the financialization of urban politicsTax increment financing, economic development professionals and the financialization of urban politics
academic.oup.com [PDF]
Financial assurance rules, also known as financial responsibility or bonding requirements, foster cost internalization by requiring potential polluters to demonstrate the financial resources necessary to compensate for environmental damage that may arise in the future …

Financial reporting and municipal bond rating changesFinancial reporting and municipal bond rating changes
www.jstor.org [PDF]
Financial assurance rules, also known as financial responsibility or bonding requirements, foster cost internalization by requiring potential polluters to demonstrate the financial resources necessary to compensate for environmental damage that may arise in the future …

The economics of structured financeThe economics of structured finance
www.aeaweb.org [PDF]
Financial assurance rules, also known as financial responsibility or bonding requirements, foster cost internalization by requiring potential polluters to demonstrate the financial resources necessary to compensate for environmental damage that may arise in the future …

Rank order analysis of state general obligation bond ratingsRank order analysis of state general obligation bond ratings
link.springer.com [PDF]
Financial assurance rules, also known as financial responsibility or bonding requirements, foster cost internalization by requiring potential polluters to demonstrate the financial resources necessary to compensate for environmental damage that may arise in the future …

Financial disclosure and bond insuranceFinancial disclosure and bond insurance
www.journals.uchicago.edu [PDF]
Financial assurance rules, also known as financial responsibility or bonding requirements, foster cost internalization by requiring potential polluters to demonstrate the financial resources necessary to compensate for environmental damage that may arise in the future …

Risk premia and the pricing of primary issue bondsRisk premia and the pricing of primary issue bonds
www.sciencedirect.com [PDF]
Financial assurance rules, also known as financial responsibility or bonding requirements, foster cost internalization by requiring potential polluters to demonstrate the financial resources necessary to compensate for environmental damage that may arise in the future …

The information content of municipal bond rating changes: A noteThe information content of municipal bond rating changes: A note
www.jstor.org [PDF]
Financial assurance rules, also known as financial responsibility or bonding requirements, foster cost internalization by requiring potential polluters to demonstrate the financial resources necessary to compensate for environmental damage that may arise in the future …

Default risk cannot explain the muni puzzle: Evidence from municipal bonds that are secured by US Treasury obligationsDefault risk cannot explain the muni puzzle: Evidence from municipal bonds that are secured by US Treasury obligations
academic.oup.com [PDF]
Financial assurance rules, also known as financial responsibility or bonding requirements, foster cost internalization by requiring potential polluters to demonstrate the financial resources necessary to compensate for environmental damage that may arise in the future …



FAQ


What is a general obligation bond?

A general obligation bond is a common type of municipal bond in the United States that is secured by a state or local government's pledge to use legally available resources, including tax revenues, to repay bondholders.

What does most mean in the context of this passage?

Most means "most" and not all.

Why do holders of general obligation bonds have a right to compel the borrowing government to levy property taxes?

Because property owners are usually reluctant to risk losing their holding from unpaid property tax bills, credit rating agencies often consider a general obligation pledge to have very strong credit quality and frequently assign them investment grade ratings. If local property owners do not pay their property taxes on time in any given year, a government entity is required to increase its property tax rate by as much as is legally allowable in following year to make up for any delinquencies. Between the taxpayer delinquency and the higher property tax rate in following year, the general obligation pledge requires the local government to pay debt service coming due with its available resources.

How does an increased tax rate affect taxpayers?

An increased tax rate affects taxpayers negatively because they will be paying more money for services provided by local governments.

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