DOUBLE BARRELED

A municipal general obligation bond in which the cash flows are pledged by two distinct and different entities. One entity will make interest payments, and the other, the principal payments. These are municipal general obligation (GO) bonds as opposed to revenue bonds because they are ultimately backed by the issuer and its taxing power.

Double-barreled bonds are sometimes referred to as "combination bonds".

These bonds, as specified by their trust indenture, are municipal general obligation bond issues. For example, assume a local city issues a double-barreled muni bond to raise funds for a new toll road bypass. In the event that the cash flows from the tolls are unable to cover the interest and/or principal payments (debt service), the shortage would be covered by the issuing city from its general fund. These bonds are thus backed by both the toll revenue stream and the full faith and credit of the issuing city.