Series 7: 3.2.3.2.1. Industrial Development Revenue Bond

Taken from our Series 7 Online Guide

3.2.3.2.1. Industrial Development Revenue Bond

An industrial development revenue (IDR) bond provides public funds to build or purchase facilities having a public purpose for private companies. A municipality will issue the bond in its own name, use the proceeds to erect a facility, and lease it to the corporation at a rate that equals its interest and principal payment obligation. The security for the bond would be based on the corporation’s ability to make lease payments, not with public funds. In other words, a rating agency will rate the bond based on the corporation’s ability to make the payments, rather than the municipality’s ability. IDR bonds are used when the issuer wishes to attract business

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