What it is:
How it works (Example):
The face value of an obligation bond is usually larger than the value of the property associated with the bond. For example, let's assume City XYZ wants to build a new stadium. It must purchase a parcel of land for $10,000,000 from a private landowner. The cost to issue $10,000,000 in municipal bonds to pay for the land is $1,000,000.