Bond Rating
The City of Kaukauna uses Municipal bonds to finance capital projects including streets, equipment, sewer systems, and buildings. Municipal bonds are debt securities. Generally, the interest on municipal bonds is exempt from federal income tax. The city typically borrows for projects for a 1-3 year span of projects. The list of projects on the 5-year capital improvement plan (CIP) can be found here. These are the projects that will have Municipal bonds issued in the future.
Many Factors go into a municipal bond financing deal. The City is rated each time it goes to market for a bond offering. The rating gives the bond market an indication of how well the city is doing and if the bonds they are issuing are a risky investment. The company used by the City to do the rating is S&P Global Ratings. This company provides the third party rating basing its rating on many different criteria. The better the rating the safer the investment is for the investors. In turn, a better interest rate to the city to borrow the funds.
The City is currently rated at a AA- with a Stable outlook. With the below high-level criteria comments.
- Strong economy in the broad and diverse Appleton metropolitan statistical area, highlighted by robust valuation gains, which is offset somewhat by weaker incomes;
- Very strong reserves and liquidity, supported by stable operating performance, which is expected to continue
- Weak debt and contingent liability profile with elevated debt service, with a well-funded pension plan; and
- Adequate financial management with standard financial policies and practices under our Financial Management
- Assessment methodology, with a five-year capital improvement plan; and a strong institutional framework score.
Link to the latest full Report – S&P Report