Which type of debt is typically used for projects generating revenue streams?

Revenue debt is specifically designed for financing projects that are expected to generate a dedicated revenue stream. This type of debt is repaid primarily from the revenues produced by the project itself, such as tolls from a toll road, fees from a public utility, or ticket sales from a sports facility. This makes revenue debt attractive to investors, as they can expect to receive returns directly linked to the project’s success.

In contrast, general obligation debt is backed by the full faith and credit of the issuing municipality and is typically used for funding public projects that do not generate a specific revenue stream, such as schools or parks. Public debt is a broader term that can encompass different types of debt, including revenue debt and general obligation debt, without specifying the revenue-generating characteristics. Short-term debt is usually utilized for immediate financing needs and is not specifically related to long-term projects that generate revenues.

Thus, revenue debt is the most appropriate choice for financing projects that are intended to generate specific revenue streams, aligning the repayment structure with the income produced from those projects.