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Criteria I Governments I U.S. Public Finance: U.S. Local Governments General Obligation Ratings:Methodology <br /> And Assumptions <br /> more detail.A major source for Hempel's work that focuses specifically on local government debt is Albert M. <br /> Hillhouse's"Municipal Bonds:A Century of Experience". Both works provide summaries and discussion,but do not <br /> present the underlying data. Hillhouse's"Defaulted Municipal Bonds(1830-1930)",lists every recorded default over the <br /> 100-year period referenced.When considering relationships between state and local governments,William A. Scott's <br /> "Repudiation of State Indebtedness"provides details on the actions of states under stress. <br /> 21. Hillhouse and Hempel come to similar conclusions on municipal defaults. On the one hand,local government defaults <br /> occur across all types of governments (see Appendix I in Section VII),in both good and bad economic times. On the <br /> other hand,the number of local government defaults becomes worrisome only during very stressful periods, and even <br /> then a majority of governments continue to pay their debts (see chart 2 and Appendix I). Both agree that the ultimate <br /> repayment record for local governments when they default is very strong. <br /> Chart 2 <br /> Gove rn me nt Defa u Its As i Pe rce ntage Of Tota <br /> Governmental By F' Of Governmerif <br /> •Ccuntws and pm ishrss ■1-=Tcrated municipal •._7i=perated municipals <br /> ■9 chm I diatricts ■uthae d&t iCt <br /> fafot 1t'. <br /> 1z. <br /> 12 <br /> 10 <br /> S <br /> t <br /> 0 <br /> "9'?9 "qsv "9 "9"9' "q f 'gog 79 '9 19-9 1191V9 %9 1% <br /> See table 16 <br /> Standard&PDDrs 2013. <br /> 22. The criteria consider the overall strong payment performance even after adjusting for differences in economic stress. <br /> The criteria are calibrated to provide rating results consistent with the extraordinarily historically low levels of local <br /> government defaults. <br /> WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 12,2013 9 <br /> 1190266 l30088t696 <br />