Public Finance: U.S. Local Government General Obligation Rating Methodology

Executive Summary

This document describes KBRA’s rating methodology as it pertains to bonds issued by public sector entities and payable from the general obligation pledge of local governments in the United States. For the purposes of this methodology, the term local governments refers to incorporated municipalities, including counties, townships, towns, cities, villages, boroughs, school districts, and special purpose municipal districts, such as library and fire districts. This methodology provides a framework for assessing the credit quality of local government issuers of general obligation debt across all states, as well as a basis for assessing certain short-term ratings of local governments, including commercial paper and bond anticipation notes. It identifies the key determinants used in the assignment of a credit rating and provides guidance as to how these determinants may be evaluated by KBRA in the process of assigning a rating.

This rating methodology was developed with the…