Gross Revenue Pledge

Definition - What does Gross Revenue Pledge mean?

Gross revenue pledge is a flow of funds pledge for a municipal revenue bond that states that debt service will be paid first.

Testopedia explains Gross Revenue Pledge

When a municiaplity builds a facility that will prodcue revenue from user fees such as a bridge, tunnel or roadway is will often be financed by issuing revenue bonds. Revenue bonds are bonds that are back by a pldge of the revenue produced by the financed facility. In the bond indenture the project must state the prioity in which expenses will be paid from the revenue the facility receives. In a gross revenue pledge the bond interest and principal are paid first. This is actually less atractive than a net revenue pledge wehre optation and maintanance are paid first. Bondholders whant the facility to be maintained in good repair so that people will continue to use the facility and the facility continues to genereate revenue.

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