Nordic Credit Rating (NCR) today published its proposed methodology for local and regional governments. The methodology defines NCR's approach to analysing the institutional framework and entity-specific factors for local and regional government entities that determine issuer ratings.
We are requesting comments on the proposed methodology and encourage interested parties to provide direct feedback via criteria@nordiccreditrating.com by 12 January 2024. We will review all comments received, with the aim of publishing an anonymised summary of comments and the final criteria during the first quarter of 2024.
Methodology summary
NCR's proposed Local and Regional Government Methodology:
- defines our approach to rating primarily Nordic local and regional government entities, as well as debt issued by rated entities;
- defines our approach to the institutional framework and entity-specific factors considered in our indicative credit assessment;
- defines the weighting and guidelines for scoring the institutional framework, including sovereign creditworthiness and local and regional government institutions;
- defines the weighting and guidelines for scoring entity-specific factors associated with demographics, budget performance, and debt burden and liquidity; and
- defines adjustment factors considered to capture features not fully reflected in our indicative credit assessment, such as sustainability concerns, contingent liabilities, and guarantees.
We have also developed a sovereign credit assessment methodology, eliminating our reliance on external credit ratings. We are also accepting comments on this proposed methodology.
Impact on existing methodologies
The proposed methodologies will result in necessary changes to four existing methodologies to reflect local and regional government ratings and sovereign credit assessments. We will also add a section on guaranteed debt instruments to our Group and Government Support Methodology. The other changes to existing methodologies are minor edits.
Impact on published ratings
The proposed methodology increases the scope of potential ratings and does not affect any published ratings. Changes to existing methodologies do not impact existing ratings.
Contacts:
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
Anine Gulbrandsen, analyst, +4797501657, anine.gulbrandsen@nordiccreditrating.com