Moral obligation bond

Moral obligation bond,

Definition of Moral obligation bond:

  1. Local governments can provide loans in the form of bonds to finance projects. The two types of municipal bonds are general bonds and tax bonds. Interest payments and principal repayments (GOs) are borne by the state treasury or local community. These bonds are guaranteed with the full confidence and credibility of the municipal government, which may have the power to levy taxes to meet the payment obligations under the GO bonds. Second, the guarantee of liability to pay tax liabilities is obtained from the forecasting sources for the project where the securities are issued. One form of tax liability is moral obligation.

  2. Protection of loans issued by local governments or other government agencies without guaranteeing public guarantees. Instead, it is backed by the government's pledge to provide future funding from the issuer in case of default. This obligation is moral and illegal, as later laws cannot be forced to comply with its provisions.

  3. Moral liability is a type of tax that is levied by a community or government agency. Ethical obligations not only enable investors to take advantage of tax-exempt municipal obligations, but also offer additional moral obligations. The issuer's commitment is supported by a reserve fund set up to cover the cost of repaying the loans, which the government cannot afford.

Meaning of Moral obligation bond & Moral obligation bond Definition