Revenue bond is a municipal bond that has been issued to finance a revenue-producing project such as a toll bridge. The proceeds from the issuance of the bond will construct or repair the facility, and the debt payments will be supported by revenue generated by the facility.
When a bridge or a tunnel needs to be built or repaired that work will often be financed by issuing a revenue bond. The interest and principal payments will be supported by the tolls or fees collected by the project. If the bond issue is being sold to build a new facility that project will be subject to a feasibility study. A feasibility study will determine if the project can be built and if it can be operated economically in light of competing facilities.
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