General Obligation Bonds Law & Legal Definition

General obligation bonds are a type of municipal government bond, which is government debt issued to raise money to finance public improvements. A general obligation bond is a municipal bond backed by the credit and "taxing power" of the issuing jurisdiction, rather than the revenue from a given project. No assets are used as collateral for the bond and the bond is not dependent on revenue of any particular project for repayment.

A typical state statute authorizing a state agency to issue general obligation bonds in as, in part, as follows:

"The proceeds from the sale of such bonds shall be used exclusively for the purposes described in the aforesaid constitutional amendment. Such bonds may be sold and issued in one or more series at any time and from time to time, may have such series designations, may be in such forms, principal amounts, denominations and numbers, may be of such tenor and maturities, may bear such date or dates, may be payable in such installments and at such time or times, may be payable at such place or places within or without the state, may bear interest at such rate or rates payable and evidenced in such manner, may contain provisions for redemption at the option of the state to be exercised by said authority on such date or dates prior to their respective maturities and upon payment of such redemption price or prices, and may contain such other provisions not inconsistent with the provisions of said amendment and this article, all as shall be provided by the board of directors of said authority in the resolution or resolutions pursuant to which such bonds shall be authorized, sold, and issued."