Public Finance: U.S. Special Tax Revenue Bond Rating Methodology

Executive Summary

This document describes KBRA’s rating methodology for rating Special Tax Revenue debt of state and local governments in the United States. For purposes of this methodology, Special Tax Revenue bonds refer to bonds that are secured by a lien on revenues derived from the levy of a tax or fee on the sale of goods and services or other specifically defined revenue streams.

Special Tax Revenue bonds encompass a variety of different revenue streams and may be issued under different names. Each type of revenue stream securing a Special Tax Revenue bond has distinct characteristics, risks and considerations. The methodology described in this report provides the framework for rating most Special Tax Revenue bonds and focuses on several major forms: Sales and Use Tax, Hotel/Motel Tax, and Gas Tax/Motor Vehicle tax. KBRA may utilize this methodology to analyze other revenue streams that fall broadly within the special tax category.

KBRA’s analysis of a Special Tax Revenue bond is…