General Obligation Bond (GO Bond)
A municipal bond backed by the full faith, credit, and taxing power of the city — meaning the city pledges to raise taxes if necessary to repay bondholders.
How It Works
GO bonds are the most common type of municipal debt and typically carry lower interest rates than revenue bonds because they are backed by the city's taxing authority. They are usually issued for capital projects that benefit the entire community — schools, roads, parks, public buildings. Most states require voter approval before a city can issue GO bonds. The city's credit rating directly affects the interest rate it pays on GO bonds.
Related Terms
- Revenue Bond — A municipal bond repaid from a specific revenue stream (like water fees or toll road revenue) rather than the city's general taxing power.
- Municipal Bond — A debt security issued by a city, county, state, or other government entity to finance capital expenditures. Interest income is generally exempt from federal income tax.
- Debt Service — The annual cost of repaying outstanding municipal debt — including both principal payments and interest on bonds and other borrowings.
- Credit Rating (Municipal) — An assessment by a rating agency (Moody's, S&P, Fitch) of a city's ability and willingness to repay its debt obligations. Higher ratings mean lower borrowing costs.
About This Definition
This definition is part of the CitySpend Municipal Finance Glossary — 59 terms explaining how city governments fund and manage public services. All definitions are written in plain language for taxpayers, journalists, students, and municipal bond investors.