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.

  • Adequate economy, with access to a broad and diverse metropolitan statistical area (MSA)
  • Strong management, with good financial policies and practices under our Financial Management Assessment (FMA) methodology
  • Strong budgetary performance, with operating surpluses in the general fund and at the total governmental-fund level in fiscal 2019;
  • Very strong budgetary flexibility, with available fund balance remaining above 30% of operating expenditures;
  • Very strong liquidity, with total government available cash at 148.3% of total governmental-fund expenditures and 6.4x governmental debt service, and access to external liquidity we consider strong;
  • Weak debt-and-contingent-liability position, with debt service carrying charges at 23.2%of expenditures and net direct debt that is 230% of total governmental-fund revenue, but rapid amortization, with 72.7% of debt scheduled to be retired within 10 years
  • Adequate institutional framework score

Link to the latest full Report – S&P Report