What is the primary method for issuing revenue bonds?

The primary method for issuing revenue bonds is based on specific revenue streams generated by enterprises. Revenue bonds are distinctive in that they are secured by the revenue that is produced from a specific project or service, rather than being backed by the full faith and credit of the issuing government. This typically includes income from sources such as tolls from a roadway, utility fees, or lease payments from a facility.

Such bonds appeal to investors because they are linked to identifiable cash flows; thus, the investors will rely on the success and profitability of the associated project or enterprise. Because the repayment is directly dependent on the revenue generated from these specific sources, revenue bonds often do not require voter approval or rely on general taxation, making them a more streamlined option for financing essential infrastructure projects.

This method allows for flexibility and can enable projects to move forward without the often lengthy process of securing voter approval, thus accelerating the ability to deliver public services. Therefore, using specific revenue streams provides clarity and security to both the issuer and the investors involved in the transaction.