Non-sovereign government debt is issued by local governments or quasi-government entities, backed by their tax revenue or specific project revenue.

The credit analysis of non-sovereign debt backed by tax revenue has similar considerations to sovereign bonds. i.e. the ability to levy and collect taxes and fees to service debt. Note that local governments have limited jurisdictional powers and no control over economic and monetary institutions, however.

Projected-based revenue bonds are typically evaluated based upon the cash flows associated with the underlying project. The repayment ability for the bond is directly linked to the revenue of the specific underlying project, rather than the general tax revenue of the state. A key measure is the debt service coverage ratio, which measures how much revenue is available to cover debt payments (principal and interest) after operating expenses. Many revenue bonds have a minimum ratio covenant. The higher the debt service coverage ratio, the stronger the creditworthiness.