A revenue bond is a special type of municipal bond distinguished by its guarantee of repayment from revenues generated by a specified revenue-generating entity associated with the purpose of the bonds. Unlike general obligation bonds, only the revenues specified in the legal contract between the bond holder and bond issuer are required to be used for repayment of the principal and interest of the bonds.
Like corporate bonds, the revenue bond issuer is also to be assessed and seen if the project can generate enough cash flows to satisfy the obligations due to the bondholder.