Series 50: Nature Of Issuer’s Debt

Nature of Issuer’s Debt

The state of a municipality’s current debt is another important indicator of credit risk. Some questions to consider:

• • How diversified is the source of tax revenue, and how great is the current tax burden on the community?
• • What sources of new debt are on the horizon to erode the creditworthiness of existing debt, and how high is the debt burden in relation to its debt limit, if the community has one?
• • If the municipality’s debt is approaching its statutory limit, what flexibility does it have to increase or work around that limit?
• • Does the community have a history of being open or hostile to the prospect of new taxes?

D