A credit rating is an evaluation of the credit risk of a prospective debtor (an individual, a business, company or a government). It helps predict their ability to pay back the debt, and a forecast of the likelihood of the debtor defaulting.
Improvements to the City’s credit rating require positive changes to the credit rating categories.
Story behind the numbers
A credit rating of ‘AA’ or higher generally indicates favourable ratings for most of the rating categories of institutional framework, economy, financial management, budgetary flexibility, budgetary performance, liquidity, debt burden and contingent liabilities.
A debt (or bond) rating is a grade given to a bond that indicates its credit quality. A bond rating evaluates a bond issuer's financial strength or its ability to pay a bond's principal and interest in a timely fashion.
A rating of ‘AA’ is the second highest rating that is possible to be obtained. An ‘AA’ rating means that the organization’s capacity to meet its financial commitments on obligations are very strong. The modification of a rating with a plus sign (+) shows relative standing within the major rating categories.
The most recent credit review of the City of Hamilton by S&P Global Ratings in November 2017 affirmed the previous credit rating and outlook and highlighted our strengths as:
- Institutional framework – Very predictable and well balanced
- Economy - Very strong
- Financial management - Strong
- Budgetary flexibility - Average
- Budgetary performance - Strong
- Liquidity - Exceptional
- Debt burden - Very low
- Contingent liabilities - Very low
General Trend: Improving
Source: S&P Global Ratings Credit Review
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