What type of bonds are backed by revenues from specific projects or sources?

Revenue bonds are specific types of securities that are backed by the income generated from a particular project or a dedicated revenue stream. Unlike general obligation bonds, which are supported by the full faith and credit of the issuing government entity, revenue bonds are tied directly to the financial performance of specific projects, such as toll roads, bridges, water and sewage facilities, or stadiums. This means that investors receive interest payments from the revenues produced by these projects rather than from the general tax revenues of the issuer.

The focus on specific revenue sources provides a higher risk profile for the investor, as the repayment of the bonds relies on the project's success and profitability rather than the general financial health of the issuing government entity. Therefore, the distinguishing feature of revenue bonds is their dependence on project-specific funds, which makes them unique compared to other types of bonds.