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Finance: What is an Airport Revenue Bond? 8 Views
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Description:
What is an Airport Revenue Bond? An airport revenue bond is a muni bond that is issued and backed by an airport. The revenues from the airport pay for the outstanding debts associated with the issuance of the bonds.
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Transcript
- 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
Full Transcript
- 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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