How is interest usually paid on revenue bonds?

Interest on revenue bonds is typically paid from the earnings generated by the specific project or facility for which the bonds were issued. Revenue bonds are designed to finance income-producing projects, such as toll roads, bridges, airports, or utilities. The revenue generated by these projects is then used to pay back the bondholders, which includes covering the interest payments on the bonds.

This structure differentiates revenue bonds from general obligation bonds, which rely on tax revenue for repayment. Since revenue bonds are backed by the income generated from the project itself, they carry a certain level of risk based on the project's financial success. This mechanism ensures that bondholders are paid from the profits derived from the facility, aligning the interests of the investors with the performance of the project.