2.13.1.1. Analyzing General Obligation Bonds
In evaluating general obligation bonds, the first thing to look at is the overall financial health of the issuing municipality. Property values that are growing over time are one indicator of a healthy local economy. A diversified economic structure that can weather an economic downturn is another. A growing, high-income population indicates an ability to increase taxes, as does a rising trend in property values.
The state of a municipality’s debt is another important indicator of credit risk. To evaluate debt, analysts consider several ratios. One of them is net overall debt per capita. This is a measure of the total tax burden on a municipality’s residents. Net overall debt is a combination of net direct debt and overlapping debt. Net direct debt is defined as the short- an