Municipal Bond Rating Process: Implications for Local Government Decisions

摘要

The municipal bond rating process is analyzed, and information is supplied on the operation of the municipal bond market and on the process of credit evaluation. Reasons why a community should or should not acquire a bond rating are discussed. Data on the use of bond ratings by communities in different states and by type of community are presented, as is an evaluation of the controversy over the effect of ratings on borrowing costs. Differences between the two major rating agencies, Moody's Investors Service, Inc. and Standard and Poor's Corporation, are discussed. The report also discusses what weights are attached to different community characteristics. The factors utilized by officials at the two rating agencies are examined. It is noted that a community has little control over many of the variables that influence a bond rating. An annotated bibliography is included.