General obligation bonds (GO bonds) refer to a type of U.S. municipal bonds, secured by the aggregate tax, operating and other income of the issuer. Unlike project revenue bonds, GO bonds are mostly used to cover the issuer’s ongoing needs and to finance non-profit public projects.
The amount of tax revenue to be used for bond payments may be limited or unlimited. If it is limited, the issuer may increase property taxes to service GO bonds, but up to a statutory limit. If it is unlimited, the limit is 100%, but in most states such increases must be made only with the consent of the taxpayers.
As a result, GO bonds are of high credit quality and are considered the most reliable type of lower return than the revenue bonds with similar parameters.
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