Debt that is issued by one entity but backed by the promise of another entity to make up any debt service deficiency is
A)Committed debt.
B)Overlapping debt.
C)Conduit debt.
D)Moral obligation debt.

Question

Quizplus · Accepted Answer

Debt that is issued by one entity but backed by the promise of another entity to make up any debt service deficiency is known as moral obligation debt. Although the issuer does not have a legal obligation to repay the debt, the presence of a morally obligation entity to support the debt can often provide sufficient reassurance to investors, which can result in more favorable borrowing rates.

Debt That Is Issued by One Entity but Backed by the Promise