What type of bonds are usually ranked with the highest security due to being secured by voter approval?

The type of bonds that are usually ranked with the highest security due to being secured by voter approval are general obligation (GO) bonds. These bonds are backed by the full faith and credit of the issuing municipality, typically requiring voter approval to be issued. This backing means that the issuer is committed to using its taxing power to ensure that bondholders are repaid, which provides a strong level of security.

Because GO bonds are secured by the taxing authority of the issuing body, they tend to be considered safer compared to other bonds, such as revenue bonds, which are tied to specific revenue streams (like those generated from a particular project, facility, or service) and may not carry the same level of security. Similarly, hybrid and special facility bonds do not typically have the same backing as GO bonds and can vary significantly in terms of risk and repayment structures.

Therefore, the security of general obligation bonds, bolstered by the necessity of voter approval, makes them a highly reliable choice for investors looking for lower-risk municipal investments.