Toll Revenue Bond

  

Categories: Bonds

Nestle cookies come to mind, but...no. Alas, they have nothing to do with this bond.

A toll bridge (or tunnel or other throughfare) is one which collects a few bucks from drivers who want to use its throughway. Those tolls are usually pretty predictable, as commuter traffic doesn't vary all that much from year to year. So...given its predictability and the likelihood of more traffic in the future (and not less), banks and other investors are all too happy to lend money to toll bridges.

For that reason, toll revenue bonds get floated all the time. They're backed up by the tolls themselves, and are floated to make repairs on the current bridge, to add a lane or three, or another deck, or to build a new bridge to snarf off some of the traffic crowding the bridge 15 miles away.

Safe. Predictable. Low-interest.

See: Muni Bond.

Related or Semi-related Video

Finance: What is an Airport Revenue Bond...8 Views

00:00

finance a la shmoop what is an airport revenue bond, well it's just uh [A muni bond on the table]

00:08

muni bond people don't get all uptight let's go through security here alright

00:12

well there are many flavors of muni bonds and airport is a popular one all [Different flavors of muni bonds]

00:17

right you know what a muni bond is generally safe, backed by the local

00:20

government but you know sometimes people get nervous about them because well

00:24

frankly a lot of municipalities are going bankrupt particularly California

00:28

Stockton, San Bernardino even Orange counties in trouble so investors like

00:32

the safety of muni bonds with revenue attached and hence we have the airport [Airplane takes off from airport]

00:37

muni bond backed by revenues from the airport and the you know clever name

00:42

Well in this country a whole lot of airports were

00:45

initially built by the military so those were federal dollars put to work but

00:50

once the runway was in and there was access for parts and fuel while the

00:54

military generally lost interest oh and the effect that wars went away kinda [Tanks waiting]

00:59

helped so they didn't really need the fancy bathrooms with the

01:02

mother-of-pearl tile and sink knobs you know military people well they can use a [Military man peeing in the bushes]

01:08

tree or a bush most of the time they're tough so lots and lots of upgrades have

01:11

been needed for airports over the last decades especially with the advent and

01:15

popularity of private aviation...Airports issue muni bonds backed by their ability

01:21

to collect things like landing fees overnight motel airplane parking fees

01:26

premiums placed on jet fuel and a bunch of other revenue sources that small

01:30

airports lean on to pay for the upgrades they've installed. Sometimes the city [People walking through airport terminal]

01:35

issues the bond and the city owns the airport and at other times it's just the

01:39

airport itself but done as a muni bond so that the airport gets a really low

01:43

interest rates from the locals so yeah that's an airport revenue bond and it's [Man holding airport revenue bond on a plane]

01:47

a you know muni in the bank...

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