general-obligation bond: meaning, definition, pronunciation and examples
C2Technical/Formal
Quick answer
What does “general-obligation bond” mean?
A municipal bond backed by the full faith and credit of the issuing government entity, meaning repayment is secured by the government's general taxing power, not just revenue from a specific project.
Audio
Pronunciation
Definition
Meaning and Definition
A municipal bond backed by the full faith and credit of the issuing government entity, meaning repayment is secured by the government's general taxing power, not just revenue from a specific project.
A financial instrument representing a loan to a state or local government, where the issuer pledges to use all available resources, including tax revenues, to repay the debt. It is considered lower risk than revenue bonds but typically offers a slightly lower yield.
Dialectal Variation
British vs American Usage
Differences
The term is primarily American. The concept exists in the UK, but the specific terminology and legal framework differ. In British public finance, similar instruments are often discussed as 'local authority bonds' or more generally under 'gilts' for central government debt.
Connotations
In US contexts: Standard, established public finance tool. In UK contexts: Recognized as an Americanism; may not have precise lexical equivalent.
Frequency
Very high frequency in US finance, business, and municipal contexts. Extremely low to zero frequency in general UK English.
Grammar
How to Use “general-obligation bond” in a Sentence
[Government/Authority] issued a general-obligation bond to finance [project].The [bond] is a general-obligation bond, backed by the [city's/state's] full faith and credit.Vocabulary
Collocations
Examples
Examples of “general-obligation bond” in a Sentence
adjective
British English
- The council debated the general-obligation bond proposal.
American English
- The city's general-obligation bond debt is rated AA.
Usage
Meaning in Context
Business
Common in financial news, investment analysis, and municipal finance reports.
Academic
Used in economics, public administration, and finance textbooks and journals.
Everyday
Virtually unused. Might appear in local news about school or infrastructure funding via ballot measures.
Technical
Precise term in bond indentures, official statements, credit rating reports, and regulatory filings.
Vocabulary
Synonyms of “general-obligation bond”
Vocabulary
Antonyms of “general-obligation bond”
Watch out
Common Mistakes When Using “general-obligation bond”
- Misspelling as 'general obligation bond' without the hyphen in formal financial contexts.
- Confusing it with 'treasury bond' (federal) or 'corporate bond' (private).
- Using it as a general term for any safe bond.
FAQ
Frequently Asked Questions
Typically, state, county, city, or other local government entities in the United States have the authority to issue them, often requiring voter approval.
No. While they are among the safest municipal bonds, they carry credit risk based on the financial health and taxing ability of the issuing government. They are not backed by the U.S. federal government.
For relative safety of principal, steady income (often exempt from federal and sometimes state taxes), and to support public projects. They typically offer lower yields than riskier revenue bonds.
It is a legal pledge that the issuing government promises to use all its available resources, primarily its power to levy taxes, to repay the bondholders, prioritizing this debt over other expenditures.
A municipal bond backed by the full faith and credit of the issuing government entity, meaning repayment is secured by the government's general taxing power, not just revenue from a specific project.
General-obligation bond is usually technical/formal in register.
General-obligation bond: in British English it is pronounced /ˌdʒen.ər.əl ˌɒb.lɪˈɡeɪ.ʃən bɒnd/, and in American English it is pronounced /ˌdʒen.ər.əl ˌɑːb.lɪˈɡeɪ.ʃən bɑːnd/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “Backed by the full faith and credit”
Learning
Memory Aids
Mnemonic
Think 'GO' for 'General Obligation' – the government says 'GO' and can use all its general funds to pay you back.
Conceptual Metaphor
DEBT IS A PROMISE (specifically, a broad, all-encompassing promise from a government).
Practice
Quiz
What primarily distinguishes a general-obligation bond from a revenue bond?