Smaller municipalities or cities get credit scores based on the rating of the country. So if a city is nearly bankrupt but the country itself is doing great it will still get a good credit rating. That renders ratings for cities sort of worthless
Smaller municipalities or cities get credit scores based on the rating of the country.
Paul
1

Hi Paul, not quite true. Country ratings play a role only with international ratings. Instead, cities are typically rated on a national scale (because that’s what domestic investors require) where the sovereign rating is irrelevant. That’s why ratings are so important: they play a major part in determining the cost of capital for cities’ investments. Exactly the opposite of “worthless”. Do you have examples of “bankrupt cities with good ratings”? Cheers!