Combination Bond

Government bonds can be backed in two general ways. One draws its revenue from the project that bonds are meant to finance. So if the money raised from the bonds funds the building of a toll-supported road, the cash raised from the tolls will be used to pay off the bonds.

The other option for backing government bonds comes from tax revenue. This scenario involves the whole "full faith and credit" thing. Basically, the government promises to use part of its tax revenue to pay off the bond debt.

A combination bond brings these two payment forms together. This type of debt security is backed both by revenues generated by the specific project and by tax revenue. The multiple revenue streams make the bond a safer investment. It's meant to provide double assurance that the debt will be repaid, hopefully allowing the government to offer a lower yield when it looks to bring in buyers.