3.1.1 Security and Source of Payment

The most fundamental, critical features distinguishing debt obligations in the municipal securities market is the source of funds that pay the debt obligations and the security backing that source.

The strengths, weaknesses, and security of the sources of payment may differ significantly and are critical to investors in the municipal securities market.

The security and source of payment determine which population will be responsible for paying debt service on the debt obligation, which is critical to issuers.

The security and source of payment often drive the structure of the debt obligations, which is critical from a legal standpoint.

As a result, the first critical difference between debt obligations is the security and source of payment.