Which entities can issue General Obligation Bonds?

Which entities can issue General Obligation Bonds?

• A. Banks
• B. States, municipalities
• C. Federal agencies
• D. Individuals

Answer: (B)

General Obligation bonds are debt issued by government entities that have the power to levy taxes. This broad taxing authority backs the bond, making repayment come from general funds rather than a specific project’s revenue. That’s why states and municipalities (cities, counties, and other local governments) are the typical issuers. Banks and individuals don’t have the authority to issue GO bonds, and while federal agencies issue debt, it’s not in the form of local/government GO bonds. GO bonds are contrasted with revenue bonds, which are repaid from a dedicated revenue stream tied to a particular project.

General Obligation bonds are debt issued by government entities that have the power to levy taxes. This broad taxing authority backs the bond, making repayment come from general funds rather than a specific project’s revenue. That’s why states and municipalities (cities, counties, and other local governments) are the typical issuers. Banks and individuals don’t have the authority to issue GO bonds, and while federal agencies issue debt, it’s not in the form of local/government GO bonds. GO bonds are contrasted with revenue bonds, which are repaid from a dedicated revenue stream tied to a particular project.