Debt Service
Municipal securities are issued by state and local governments for infrastructure and capital purposes. Debt service is typically an insignificant part of a general fund budget and most state and local governments apply a practice of paying their debt service first before covering all other expenses. Defaults on municipal debt are rare. In fact, municipal securities are considered to be second only to Treasuries in investment risk level.
The City of Carmel’s municipal securities are rated AA (Investment Grade) by S&P Global Ratings. A rating of AA is defined as a state or local government with a very strong capacity to meets its financial commitments. This rating reflects a very strong economy which is broad and diverse, strong management with good financial policies and practices, very strong budget flexibility based on available fund balances and very strong liquidity based on available cash and exceptional access to external liquidity if necessary. The City’s debt service, as a percentage of the 2022 budget, is 16%.
Updated June of 2022