utility bond
Noun: A type of debt security issued specifically to raise capital for building, improving, or maintaining public utility infrastructure, such as water, electricity, gas, or sewage systems. Investors who purchase these bonds are lending money to the utility issuer in exchange for periodic interest payments and the return of the principal amount at a future maturity date.
This term is used in finance, economics, and public policy contexts to discuss municipal or corporate financing for essential public services. - The primary purpose of a utility bond is to fund capital projects for public utilities. - Utility bonds are often considered relatively stable investments because they are backed by the revenue generated from essential public services.
- The city council approved the issuance of a new utility bond to fund the expansion of the water treatment plant.
- Investors seeking steady income often include utility bonds in their portfolios due to their reliable revenue stream.
- The proceeds from the utility bond were exclusively allocated to upgrading the electrical grid.
- Revenue Utility Bond: A specific type of utility bond where the debt is secured solely by the revenues generated from the utility project it financed, not by the taxing power of the municipality.
- The revenue utility bond for the new toll bridge was rated based on projected traffic income.
- Municipal Bond: A broader category of bonds issued by local governments, which can include utility bonds.
- Revenue Bond: A bond secured by specific project revenues, under which utility bonds often fall.
- Infrastructure Bond: A general term for bonds financing public works, encompassing utility projects.
- Public utility bond
- Infrastructure debt security
While "utility bond" specifically refers to financing for public utilities, the term bond alone is much broader, referring to any instrument representing a loan made by an investor to a borrower. The key distinction of a utility bond is its designated use for essential public service infrastructure.
- a bond issued to finance the construction of public utility services