Fitch Updates U.S. Tax-Supported Rating Criteria
OREANDA-NEWS. Today Fitch Ratings has published its updated U.S. Tax-Supported rating criteria report. Rating changes as a result of the criteria implementation are expected to be minimal.
Notable aspects of the new criteria include:
--Published assessments of four key rating factors will drive rating outcomes in the context of the economic base: revenue framework, expenditure framework, long-term liability burden and operating performance.
--Most Fitch-rated state and local government tax-supported issuers will have Issuer Default Ratings, which are equivalent to unlimited tax general obligation ratings.
--Scenario analysis will provide a framework for consistently communicating Fitch's forward-looking view regarding the issuer-specific impact of a cyclical downturn on revenues and the options available to address the resulting budget gap. This approach conveys a range where a rating would likely remain stable or for potential rating changes.
--This through-the-cycle analysis incorporates the Fitch Analytical Sensitivity Tool - States & Locals (FAST). FAST generates a revenue scenario based on a common GDP stress, grounded in historical data for each issuer. FAST provides insight into an issuer's revenue trends through the cycle and allows for peer analysis. FAST is not a forecasting tool.
In addition to the updated criteria report, Fitch has released three related reports, all of which are available at www.fitchratings.com or by clicking the links below. One report summarizes industry feedback received during the comment period for the criteria exposure draft, which commenced on Sept. 10, 2015, and Fitch's response to that feedback.
The second report is a user guide that describes how Fitch will administer the criteria. This guide is in response to requests by market participants during the exposure draft period.
Finally, Fitch has released a report describing FAST, in addition to the tool itself. (For more information see 'Fitch Launches Analytical Sensitivity Tool - State & Local Govt's V2.0' at www.fitchratings.com.)
Access to the tool and all criteria-related documents is available through the website on a complimentary basis for three months. Registration is required.
Fitch will host a conference call to discuss the final criteria on Thurs., April 21 at 2:00 EST. To receive dial-in details for the call, please resister here: http://dpregister.com/10084380.
The updated 'U.S. Tax-Supported Rating Criteria' published today replaces the following criteria reports:
--'Tax-Supported Rating Criteria' (August 2012)
--'U.S. State Government Tax-Supported Rating Criteria' (August 2012)
--'U.S. Local Government Tax-Supported Rating Criteria' (August 2012)
--'Rating Guidelines for State Credit Enhancement Programs' (April 2013)
--'Rating Guidelines for Moral Obligations' (April 2013)