A bond rating is an evaluation of credit risk. While many factors go into the investment decision making process, the bond rating is often the single most important factor affecting the interest cost on bonds.
View the 2024 reports: Moody’s [PDF(PDF, 1MB) ] and Standard & Poor’s [PDF(PDF, 347KB) ]
Before issuing a bond, municipalities typically must have a bond rating from Standard and Poor’s (S&P), Moody’s, or Fitch. They evaluate local, state and federal governments on the economic well-being of the area and your government’s ability to pay back debt issued on a bond. In assigning a rating for general obligation bonds the rating agencies assess the following factors:
AAA and Aaa are the highest quality and grade. Bonds rated Aaa or AAA have a high degree of creditworthiness because their issuers are easily able to meet financial commitments and have the lowest risk of default. In the 2024 bond rating reports, it was noted that several factors contributed to the City of Kirkland’s high rating such as:
Municipal bonds are a useful financing mechanism for local governments to ensure long-term financial security. Municipalities with higher bond ratings have correspondingly lower interest rates that result in greater cost-savings over time, especially when issued to finance larger projects. The result? More funds to complete projects without having to raise taxes. For example, for the City of Kirkland, the AAA rating means that the cost of borrowing for the planned debt issuance of $42.5 million is approximately $888,000 less than it would be if the City had an AA rating.
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