Conduit issuers are usually government agencies that are raising capital for projects with revenue-generating character. Organizations or government agencies do this by issuing municipal securities. Users of these funds are third parties who are making payments to investors. These third parties are also known as “conduit borrower”. This kind of financing has to be backed by outside investor’s funds or conduit borrower’s credit.
In case that project fails the risk is on conduit borrower. Conduit issuer would not have any obligations on that matter.