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Essential Purpose Bonds

Published: Tuesday, June 30 2015 3:22 a.m. MDT

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Municipalities issue Essential Purpose Bonds to raise funds that are used to build essential public projects such as schools, jails, and courthouses. They are secured by taxes and revenue pledges collected by the municipality. Non-Essential purpose bonds however, are issued by an established, but non-government entity. Many of them are not secured with a municipal tax or revenue pledge. Entities issuing these non-essential purpose bonds do so to fund housing, healthcare, energy, and private education projects for example.

The focus of this video concerns some of the private sectors' non-essential purpose bonds and their volatility in the market. Learn why these non-essential purpose bonds are generally considered to be of lower quality and more volatile compared to the essential purpose bonds issued by municipalities.

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