Debt burden can be defined as net outstanding tax-supported debt divided by the full value of taxable real property. All else equal, a bond-rating agency considers a higher debt burden to be better.

Question

Quizplus · Accepted Answer

A lower debt burden is considered better. For the debt burden aspect of its rating methodology, Moody's gives its highest rating (i.e., Aaa) to local governments whose net direct debt to full value of taxable real property is less than 0.75 percent, next highest rating (i.e., Aa) to those whose ratio is in the range of 0.75 percent to less than 1.75 percent, and third highest rating (i.e., A) to those whose ratio is in the range of 1.75 percent to 4 percent. Moody's gives a Baa (lower medium) rating when the ratio is between 4 percent and 10 percent and Ba grade (containing speculative elements) when the ratio is in the 10 to 15 percent range.

Debt Burden Can Be Defined as Net Outstanding Tax-Supported Debt