1. Michael Borgani, Director Fitch Ratings Date: April 24, 2006
Credit Analysis
Michael Borgani, Director
Fitch Ratings
Date: April 24, 2006

2. Credit Ratings—Terminology The Rating Process—Methodology Summary
September 3, 2019

3. What is a rating?
Notation summarizing the likelihood of a repayment for a specific debt obligation
Letter Category: AAA, AA, A, BBB,….
“+” and “-” specify placement with the category: AA+, AA, AA-, A+, …
Band of credit quality
September 3, 2019

4. A Rating Is NOT…
A judgment or statement regarding any aspect of public policy
A political statement in favor of or against a particular person or administration
A dictate of what should be done or how a matter should be handled
September 3, 2019

5. To Rate Or Not To Rate Increase investor acceptance
Current economic environment
Current capital market environment
BOTTOME LINE: Lower interest cost!
September 3, 2019

6. The Rating Process
September 3, 2019

7. Overview The Beginning: Decision and documents The Middle: Let’s Talk
The End: Rating committee, communication, and dissemination
Appeal process, if necessary
September 3, 2019

8. Other Rating Agency Products (at least at Fitch)
“Look See”
Credit Assessment
September 3, 2019

9. Elements of Tax-supported Credit
Debt and Capital Plan
Economic Factors
Financial Factors
Management
September 3, 2019

10. Management, Management, Management!
Importance revealed through Fitch’s default study
Written, adopted policies
Policy monitoring, implementation
September 3, 2019

11. Management Best Practices--Debt
Affordability guidelines
Pay-as-you-go practices
Amortization considerations
Multi-year CIP
Operating cost considered
Contingency Planning
September 3, 2019

12. Management Practices--Finance
Fund balance/reserve goals
Multi-year forecasting
Mid-year monitoring and budget adjustment
Use of non-recurring revenue
Contingency planning
September 3, 2019

13. Management Best Practices—Also Think About
Taxpayer/voter communication
Labor relations
Intergovernmental relations/cooperation
Public/private partnerships
September 3, 2019

14. Additional Credit Elements for Lease Financings
When a bond is not debt?
Project essentiality
Legal structure—Covenant to budget and appropriate
Construction and completion risk
Abatement
Evidence of support
Reliance on lease financing
September 3, 2019

15. Rating Tips Tip #1: Timing is everything (well, almost)
Tip #2: Honesty is the best policy
Tip#3: Seek and ye shall find (ask the analyst)
September 3, 2019

16. Fitch Ratings
New York One State Street Plaza New York, NY FITCH
London Eldon House 2 Eldon Street London EC2M 7UA UK
Singapore 7 Temasek Blvd. Singapore
The Fitch Group
Fitch Ratings Algorithmics Fitch Training