A municipal bond (or debenture) is a debt security issued by a municipality to raise money for capital projects, with the municipality promising to repay principal and interest over time. Investors purchase bonds, providing municipalities with immediate funds for infrastructure like roads, water systems, or recreation facilities. Municipalities make regular interest payments and repay principal at maturity, typically over 10-30 years. Municipal bonds are generally considered low-risk investments since municipalities have taxing power to ensure repayment. Provincial legislation governs municipal borrowing, often requiring council approval, debt limit compliance, and sometimes provincial authorization. Bond ratings affect the interest rates municipalities pay.