Series 50: Moral Obligation Bonds

Moral Obligation Bonds

Moral obligation bonds are revenue bonds with characteristics similar to double-barreled bonds. They are secured by revenue from the project being financed. The municipality is morally, but not legally, obligated to provide backup funds if needed. What’s the distinction? Moral obligation bonds do not require voter approval, and the municipality can choose to default if it is willing to lose its credit standing.