NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA)’s rating methodology for U.S. State Annual Appropriation Obligations addresses (i) bonds, certificates of participation (COPs) or similar instruments (state appropriation-backed obligations) that are payable by a state pursuant to a lease agreement, installment contract, or funding contract with that state and (ii) obligations of a state to replenish a debt service reserve fund that secures bonds issued by an authority, agency or other instrumentality (state moral obligations). The methodology discusses the key rating considerations used in the rating assessment and how the factors are applied in making a rating determination.
KBRA's analysis is based on both quantitative and qualitative factors and is assessed through a comprehensive review of a U.S. state’s General Obligation debt as well as a number of factors that support the KRBA evaluation of the additional risk posed by the annual appropriation nature of these transactions. These factors include an analysis of the legal environment, political environment, project essentiality, budget and appropriation process, third party risk, completion and acquisition risk, and maintenance and property insurance.
KBRA expects that ratings assigned to the vast majority of U.S. state annual appropriation obligations will generally (i) fall one notch below the state GO rating for state appropriation-backed obligations, and (ii) fall two notches below the state GO rating for state moral obligations.
To view the report, U.S. State Annual Appropriation Obligation Methodology, please visit www.krollbondratings.com.
About Kroll Bond Rating Agency
KBRA was established in 2010 by Jules Kroll to restore trust in credit ratings by creating new standards for assessing risk and by offering accurate, clear and transparent ratings. KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).
