9.1. SR 01-21-2014 - Laserfiche WebLink

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Criteria I Governments I U.S. Public Finance: U.S. Local Governments General Obligation Ratings:Methodology And Assumptions 23. We do not expect a change in the historically extraordinarily low default rates in this sector.When there is a rapid deterioration,we do expect to continue to see multiple-notch downgrades. Please see"The Time Dimension Of Standard&Poor's Credit Ratings",published Sept.22, 2010,for a description of potential ratings migration. B. Framework For Determining A U.S. Local Government Rating 24. The criteria assess seven factors: • Institutional framework(see paragraphs 36-40); • Economy(see paragraphs 41-47); • Management(see paragraphs 48-58); • Budgetary flexibility(see paragraphs 59-64); • Budgetary performance(see paragraphs 65-68); • Liquidity(see paragraphs 69-77); and • Debt and contingent liabilities(see paragraphs 78-84). Scores for each factor range from'1' (the strongest)to'5' (the weakest).The economy score receives a 30%weight and management receives 20%.These scores receive the highest weight because of management's ability to tap the local economic base for additional revenues if it chooses to do so in a timely manner. The financial scores combined receive 30%,with liquidity,budgetary performance, and budgetary flexibility each accounting for one third of the 30%.The institutional framework score and debt and contingent liabilities score each receive 10%(see chart 1).Table 1 shows the indicative rating outcomes that result from the weighted average of these scores.Absent the overriding factors detailed in table 2,the final rating assigned to the GO issue or the ICR will be within one notch of the indicative rating shown in table 1,with one-notch differentials determined based on trends and comparisons with similarly rated peers. When the overriding factors detailed in table 2 notch the rating(rather than cap the rating),the one-notch differentials of the prior sentence can still be applied. Importantly,certain data are adjusted to facilitate comparability and consistency. Please refer to paragraphs 94 to 102 for a list of defined terms and related adjustments. In addition,please refer to the article, "Standard& Poor's U.S. Public Finance Local GO Criteria: How We Adjust Data For Analytic Consistency",published Sept. 12, 2013,for a more extensive summary of data adjustments. Table 1 Indicative Rating Outcomes Resulting From The Weighted Average Of Factor Score Weighted Average Indicative Rating 1.00-1.64 AAA 1.65-1.94 AA+ 1.95-2.34 AA 2.35-2.84 AA- 2.85-3.24 A+ 3.25-3.64 A 3.65-3.94 A- 3.95-4.24 BBB+ 4.25-4.54 BBB 4.55-4.74 BBB- WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 12,2013 10 1190266 1300881696