SIE: 2.13.2.1. Analyzing Revenue Bonds

2.13.2.1.  Analyzing Revenue Bonds

The overall health of the municipality is less critical, though still important, to revenue bond investors. Because revenue bonds are not backed by taxes, their credit rating depends more on the financial viability of the projects being funded. Three important sources of information can help determine the strength of a revenue bond.

1. 1. Feasibility studies determine whether or not there is sufficient demand for the project that the issuer has proposed. These studies also help to determine if expected revenue will be sufficient to repay the debt that the municipal entity is issuing.
2. 2. Protective covenants are limitations agreed to by the issuer of revenue bonds to provide protection for the