ABSTRACT
A debt rating is not a judgment of a municipality as a place to live; rather, it is an assessment of the willingness and ability of a municipality to meet its debt obligations. The two measures most frequently used by Moody to assess relative debt levels are debt burden and debt per capita. Nonbonded debt paid from general revenues, such as most capital leases, certificates of participation (COPs), and lease rental obligations is considered to be part of an issuer's direct debt. From Moody's point of view, the credit quality of a municipal borrower's debt depends on the issuer's ability and willingness to meet all of its obligations, including those involving leases. Therefore, even if lease obligations are not legally defined as debt for a particular municipality, Moody includes leases on the debt statement and in the calculation of debt burden and debt per capita. Moody expects short-term financing instruments to be repaid from anticipated operating revenues and taxes.
