Revenue bond

A revenue bond is a debt security for which repayment funds are derived from the project being financed. In this arrangement, the assets acquired with the proceeds from the security sale are used as collateral; bond holders do not have access to any other assets of the issuer. This arrangement is a common one for governments, which use revenue bonds for many public works projects, such as airports, roads, stadiums, subways, bridges, and multi-family housing - all of which levy fees on users. There can be problems with revenue bonds if the cash flows generated by the funded projects are not sufficient for paying back investors in accordance with the repayment schedule.