LeoGlossary: Underlying Debt (Municipal Bonds)

Underlying debt is a term that encompasses the general obligation bonds of smaller units of local government with a larger issuer’s jurisdiction. There is an understanding that the debt of these smaller governments might also be backed by the larger government’s creditworthiness.

For example, a municipality may issue a general obligation bond to finance a new school in one of its school districts. If the school district becomes insolvent, it is unlikely that the larger municipal government will allow it to cease operations; it would likely be bailed out.

• LeoGlossary Main Menu

General:

• What Is Leofinance

Posted Using LeoFinance ^Beta