Glossary of Municipal Securities Terms

FULL FAITH AND CREDIT

A term normally used in connection with general obligation bonds to express the commitment of theĀ issuer to repay the bonds from all legally available funds, including a good faith commitment to use its legal powers to raise revenues to pay the bonds, although the precise nature of such commitment may vary considerably from issuer to issuer depending on applicable state or local law. However, some issuers may issue full faith and credit bonds without stating that such bonds are general obligations. In some cases, such full faith and credit bonds may be indistinguishable from typical general obligation bonds, while other full faith and credit bonds may be expressly distinguished from general obligation bonds with potentially differing sources and priority of payments, depending on applicable state or local law. See: GENERAL OBLIGATION BOND.

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