General Obligation Bonds

General obligation bonds, or GO bonds, are municipal bonds that aren’t directly connected to a specific revenue-producing project. While revenue bonds are attached to a project, such as a utility, an airport, or a toll road that generates revenue to pay back bondholders, general obligation bonds are typically used for infrastructure projects that don’t directly generate revenue.

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An infographic explaining the types of general obligation bonds and their differences. — Image source: The Motley Fool

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Instead of direct revenue, the municipality’s ability to tax is used to secure GO bonds. Sometimes a community might raise property taxes or local income or sales taxes in order to pay back bondholders.

In the article below, we’ll discuss how local governments raise money for GO bonds, the different kinds of general obligation bonds, and answer commonly asked questions about this type of bond.

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Understanding Treasury Bonds and Other Investments

Issued by the U.S. government to raise money, T-bonds should have a place in your portfolio.

Your Complete Guide to Corporate Bonds

If the issuing company remains solvent, bonds can be a good, stable investment.

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

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