Types of municipal bonds

With regard to the funding of infrastructure, there are two sorts of bonds that could be used:

• Government bonds: The proceeds of these bonds are used to finance the building, operation, and maintenance of public infrastructure used by the issuing party or another government party. Examples of such infrastructure include roads, schools, libraries, and fire stations.

• Qualified private activity bonds (QPABs): The proceeds of these bonds must go to capital expendi ture, so they may be used either to fund new infra structure or to upgrade or refurbish existing infra structure.

Figure 4: Steps in launching a public bond