SAN ANTONIO – What is a bond rating?
A bond rating is a grade given to a bond that indicates its credit quality and how easily the city can pay back a bond.
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Which factors are graded in a bond rating?
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Level of debt, the city’s trend to pay back debt, including making regular payments;
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Pensions, because people who receive pensions get paid before bond holders;
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And how much San Antonio can ultimately repay through their taxes and utility bills
What is reviewed in a bond rating?
Utilities -- such as the San Antonio Water System and CPS Energy -- housing, private universities and other nonprofit organizations.
How will the city react to a lower bond rating?
The city may cut costs and raise taxes. The city will try to manage the problem and regain financial stability by continuing to collect taxes, even though it has to cut back services.
Did the recent charter amendment approval lower the bond rating?
Yes, Amendment C allows for the fire union to force the city into binding arbitration during firefighters' collective bargaining agreement negotiations. Funding for the fire and police departments use the majority of long-term budgets and have the potential to increase. This will force the City of San Antonio to find other revenue sources and/or reduce public services.
Who rates the bonds?
Independent rating systems, such as Standard & Poor's, Moody’s and Fitch.
What is the grade scale?
Chart information from Investopedia.com