What is the typical purpose of revenue bonds?

The typical purpose of revenue bonds is to finance specific projects. These bonds are issued by governmental entities and are backed by the revenue generated from the projects they fund, such as toll roads, bridges, airports, or utilities. The funds raised from the sale of revenue bonds are specifically earmarked for the development or enhancement of these projects, and the repayment of the bonds is secured by the income produced by the project itself.

This structure allows municipalities to undertake specific initiatives without relying on general tax revenues, thereby ensuring that the funds are utilized for their intended purpose. Investors are often attracted to revenue bonds due to their unique backing, which can offer a steady stream of income derived directly from project usage or operations.