Special bonds, also known as income bonds, refer to government bonds issued to raise funds for the construction of specific projects, which stipulate that the government funds or special income corresponding to public welfare projects will repay the principal and interest within a certain period of time, and are a kind of local government bonds.

Special bonds are issued for profitable and public welfare projects, and must be able to generate sustained and stable cash flow income, fully cover the scale of debt repayment, and be more closed and independent than ordinary bonds. Ordinary bonds (ordinary bonds) are issued by local governments to alleviate the shortage of funds or solve the temporary shortage of funds, usually with local fiscal revenue as a guarantee.

Special bonds include new special bonds and refinancing special bonds. Its application fields include land reserve, toll roads, shantytown renovation, transportation infrastructure (railways, airports), urban rail transit, and renovation of old urban communities. Its declaration process is mainly divided into four stages: project establishment, project declaration, project issuance and bond duration management.

According to the requirements of the Measures for the Administration of the Use of Special Bond Funds, the use of special bond funds should strictly correspond to the capital expenditure of the project, and no unit or individual may intercept, occupy or misappropriate it, or use it for recurrent expenditure, or adjust the project, or adjust the use of funds, and complete the expenditure within the specified time.

The scope of use of special bond funds needs to be compared with the construction content when compiling "one case, two books" to pay related engineering costs, and other engineering costs other than the construction content may not be paid.

Local government bonds are classified according to the purpose of funds and the source of repayment funds, and can usually be divided into general bonds (ordinary bonds) and special bonds (income bonds). The former refers to bonds issued by local governments to alleviate the shortage of funds or solve the temporary shortage of funds, while the latter refers to bonds issued to raise funds to build specific projects.

For the repayment of general bonds, local governments usually use local fiscal revenue as a guarantee, while for special bonds, local governments often use the income obtained after the project is completed as a guarantee.