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Municipal bonds are of two kinds: GO (General Obligation) Bonds or Revenue Bonds. My question on Revenue Bonds is: are the revenues from the specific project secured or can the local government use those revenues for other purposes without paying the bond holders?

If the revenue from the project performs badly the revenue bond defaults. In this sense revenue bonds are more risky than general obligation bonds. However, my question is if the opposite is true. If the revenue of the project performs well but the local government is in deep trouble can it default on the revenue bond?

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